Intel Corporation (INTC) Earnings Call Transcript & Summary

All right. Good morning, everybody. I'm Joe Moore from Morgan Stanley. And I really wanted to welcome everyone to the Morgan Stanley TMT Conference. Thanks very much for your partnership, and we certainly want to make this the best possible event. Appreciate being here -- everyone being here under the circumstances. And I was told to help people shake hands, if you want to, but don't feel obligated. It's [indiscernible] everywhere. So be safe, enjoy the conference, and it should be great. Very happy to have George Davis here from Intel. I've actually been asked to read the Intel safe harbor as well. So with that, today's presentation may contain forward-looking statements. All statements made that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. Please refer to the Intel's most recent earnings release, Form 10-Q and 10-K for information and the special risk factors that could cause actual results to differ. Anyway, with that out of the way, George, thank you for coming. I think maybe you wanted to give a couple of minutes of kind of opening remarks, and then we'll go into Q&A.

Sure. Thanks, Joe. And again, good morning to everybody. Thanks for coming. The -- it's been quite a good year for Intel over the last 12 months. We finished on a very high note with demand, really, across the board much stronger in '19 than we anticipated. Obviously, we'll spend a little bit of time talking about '20 here in a minute. But strong for PCs, much -- actually I would say much stronger for PCs than anticipated. And for our data center products, also a much stronger second half. In fact, many of you may remember, there was a lot of discussion in our guidance about the strength of the second half that we saw and relative to sort of historical patterns with the soft first half, strong second half. But we have seen a very soft first half and then a bounce in the second half, and we were both wrong. It was -- we were wrong on how strong it was going to be and it turned out to -- that it did turn out to be a much better year overall. I would also add that what we saw is a market that is rapidly moving to more and more processing power, which means in the PC end, we're seeing clients going for higher-performance PCs. And on the data center end, we're seeing people buying our highest SKUs. So part of the strength that we saw in '19 was really ASP-driven or mix-driven as we would typically describe it, where you saw people buying a much, much richer mix of products throughout the year. So a lot of momentum in compute. And we talk a lot about the world beginning to look like it's creating compute centers more and more -- in more and more places, and people often refer to this as Internet of Things or the Edge. And we're finding that there's a lot of demand and growth in our edge-related businesses, whether it's IoT, whether it's Mobileye, whether it's supporting the network. All these dynamics are part of a very strong push for growth in the data-centric world. So maybe I'll stop there, Joe, and let you ask questions.

And ordinarily, I'd like to start with bigger-picture vision questions. But I think at the moment, with all the focus on COVID-19, maybe we could just start there. You've made some -- you saw some of the issues around that in late January when we reported. Just maybe tell us what your latest thinking is in terms of the impact of the virus?

Sure. Obviously, China as the epicenter, I'll just briefly mention what we have in China for those who may not know it. We have a -- our NAND manufacturing plant is in Dalian. We have a test and packaging facility in Chengdu. And then we have design centers in both Shanghai and in Beijing, along with kind of corporate groups in Beijing. What we've seen, again, being in areas that weren't the hardest hit initially, we've been able, throughout this period, with some modest disruption, as you would expect, to maintain relatively normal operations in China. And obviously, our priority through this whole period has been employee safety, and we've been able to manage through this quite effectively. Obviously, like many companies, we have a lot of protective measures in the facilities for employees. But what we are starting to see, obviously, you can see it from the impact that it has on events. It's spread around the world. And the -- my biggest understatement today is probably this is a developing situation. I'm sure you'll probably hear that from a number of people. So we're starting to see customers being impacted by it, where their supply chains are being disrupted. And so they're trying to figure out when do they want all their components to arrive just to make sense with what they're seeing in the rest of their supply chain. That being said, we're coming into this environment from a shortage perspective, and that was probably the negative side of '19 for us from a performance standpoint. We weren't able to meet all of our customers' demands and actually impacted some of their outlooks as a result of that. And -- but going into a situation where supply can -- might be a little bit challenged, we're actually -- we find ourselves in, again, the ability to operate on a relatively normal basis, I would say. However, we're very, very mindful that this -- the full impact of this could expand much more significantly. We have a 24/7 pandemic team that's been working from the day this happened. A lot of the tech industry went through SARS and other events, so they have actually pretty good playbooks. And we're certainly going through all the elements of our playbook, and we're managing travel around the world. We're looking -- we have the ability to charter flights where we need to, to get certain -- as part of our supply chain to make sure that we're able to operate. So I think there's a lot of things that we're certainly going through the normal process of evaluating, but it's -- right now for us, we're able to manage at a relatively normal -- on a relatively normal basis.

Okay. And you mentioned the shortages that you had in the fourth quarter that were fairly severe I mean. It was expected to ease somewhat over the course of Q1. Is it eased a lot? Is it -- are customers in the position of being able to add inventory up to the levels that they want to hold? Or is it still fairly tight?

We go into this year fairly tight. Q4 -- probably the only disappointment in Q4 was that in the beginning and middle of the quarter, we just weren't able to supply customers in the way that we had hoped to. And we continue to see capacity growing in our system. Our capital spending has increased significantly over the last couple years, really to add the capacity necessary for our logic customers. We've actually decreased our NAND capital over that same period. So we have about 25% wafer starts up in '19. We think it'll be up about 25% again in '20, but it -- that translates into a smaller number of die out-growth because, obviously, with 10 nanometer you got -- we're in the middle of the 10 nanometer. We're still at a fairly large die size and some of that. So as we move to 10, we're absorbing some of that capacity increase. But all in all, we're -- we expect in '20 to be fully recovered in terms of the ability to supply our customers to build inventory. We have not been able to build our own inventory, much less help customers build their inventory. And we think both of those elements will be able to happen in 2020.

Okay. Great. So moving back to the bigger picture of issues facing Intel. So data-centric, kind of the overriding philosophy of the company. I sort of made the argument that the company is still fairly selective in terms of the types of opportunities that you're going after maybe relative to the past. But can you just talk about data-centric, what it means for Intel, and what that is kind of a guiding vision, what that entails for you?

Sure. So when we talk about data-centric, what we're saying is we see the company moving from a PC-centric world to a data-centric world, where more and more, the demand for raw compute power, particularly in areas like the cloud, on the edge with the onset of Internet of Things. Bob likes to say everything's starting to look like a computer. The factory looks a lot like a computer when you look at what they're doing with robotics, what they're doing with, basically, the communication between all the devices in the factory. Your car is increasingly looking like a computer, not only from the infotainment, but also to the ADAS and other elements of the car. And so data-centric is really about being positioned with products that are not only there to serve the PC world as we used to, but really, this growing data management and, increasingly, the increasing need for storage, evaluation. Certainly, everything you do in AI is tied to this. I'm getting a lot of data. What am I going to do with it? How do I manage it in a way that I can get to the value in that data quickly and as opposed to just being able to just store more and more data, dumb data. So for us, data-centric is sort of everything but the PC that serves those markets, whether it's on the network side, IoT side, data center. All those elements are very broad investment in AI. All that fits data-centric. And for the first time -- we used to be kind of a 70-30 PC then 60-40. In the fourth quarter, we were actually slightly over 50% data-centric. So that's -- we continue to make progress there. And we think that's also a very long, long outlook part of the market. And the growth there has been just terrific for us.

And as part of -- the way you guys think about that, you've talked about wanting to be 30% market share and growing in a larger space than the 90% in the smaller space. And I guess I see the positives of that, that you're looking at attacking new opportunities. But I guess the defensive questions that it raises is, are you willing to yield share within that area where you've been traditionally dominating? Can you talk about those trade-offs?

Yes. No, I think that's a fair question. The impulse is to say, "Hey, they're talking about this larger TAM." So they're going, "Hey, look over here. Don't look over here." And I think if you take that position, you're missing the bigger picture, which is being able to focus on a much broader TAM exercises different muscles than if you're focusing on preserving a very high market share in 2 core businesses. And don't mistake me. We take a very competitive view on maintaining market share and fighting for market share in our core businesses. But this data-centric commentary that we're going through is real. The growth is real. You look at the strong double-digit growth across all of our data-centric businesses, those are real opportunities. Those are real opportunities that come with attractive markets -- margins. They're attractive markets in that the margins are strong and sustainable. You have the ability to differentiate yourself. So what we wanted to do is to get away from being kind of focused as a 90% market share player, where your whole focus is defending market share, so how do you compete more effectively? How do you develop the muscles to compete more effectively? How do you become more nimble and aggressive to enter new markets where you're not the large market shareholder, but you have tremendous IP assets that should position you quite well? So for me, it's a very important distinction. It's one of the things that really attracted me to Intel, was this remarkable set of opportunities that it has at this time, coupled with an extraordinary balance of IP to bring -- to address that market. So if you saw The New York Times this morning, there's really a nice piece on what Bob is doing to change the culture -- Bob Swan, our CEO, is doing to change the culture at the company to make it more focused on how do we execute and compete in a rapid, transparent, one Intel way, bringing all of our capabilities to tackle these new markets. That's a mindset that really comes from looking at these new markets and what it's going to take to win in these markets. And you're seeing us take very strong positions in new markets as they develop. And it's really from that change in thinking of ourselves as a PC data center monolith, to really this more agile, competitive entity entering some new markets where, quite frankly, we're not the leader. And so we've got to come with solutions that drive customers to come to us.

Great. That makes sense. And I guess as you think about this wider scope for Intel, how does it inform your M&A strategy? And I guess part of my concern is always I feel like the core business is inexpensive and maybe undervalued. How do you measure accretion of something that you acquire versus the option of buying your own stock which is fairly inexpensive?

Yes. Okay. So as we think about M&A, it's always in the context of our total not only our capital structure philosophy, but how do we think about investments in general. Obviously, we have the good fortune of generating tremendous cash flow as a company. And so the question is, what do you do with that free cash flow? And for us, it's been stay on the leading end of technology. So very strong focus on R&D. As we have driven our cost down, and we can talk about that later, but R&D has really been sustained at high and record levels throughout this whole time period because we think that's still a very fundamental competitive strength of the company. So invest in the company, invest organically in the company to the extent that we're entering these new markets. One of the things that happens as you enter a new market is you don't have all the learnings. You don't have all the answers. You're not the expert in that space, and other people have experience that's very valuable. It can make you faster and a better competitive. It's not -- better competitor. It's not -- doesn't have to be a large acquisition. It can actually be picking up the pieces that really makes a difference. So we'll continue to do those elements, and those are actually quite important. So M&A is, in my mind, really all about investing, still investing in the business. We think even with the M&A that we're looking at that supports that, we have tremendous cash flow that we can return to investors. And you've seen that. Over the last 10 years, the company has returned 100%. We were at 113% of free cash flow last year. And we announced a $20 billion program for share repurchase at the end of last year, of which we got about $2 billion done last year, and we said we have about another 13, 14 months to get another $18 billion done. So $20 billion of share repurchase. We grew the dividend by 5%. So M&A fits into the overall picture of how we think about managing our free cash flow. But we're not -- anybody that's followed the -- either Bob or myself from an M&A standpoint, we're super focused on cash-on-cash returns. We're not romantic about M&A. It's really got to drive the business. And we -- I think that'll be how we look at it going forward.

Okay. Great. Before we dive into some of the businesses, maybe a couple of other just bigger-picture questions. Process technology. I know you guys aren't thrilled with the last -- the way that you performed last year. So can you talk about the progress of 10 nanometer and 7 nanometer, and your confidence level going forward there?

Sure. Well, we're definitely in the 10-nanometer era. And we launched, I say, clients at the end of last year. We have GPUs coming out, a discrete GPU coming out this year. We have networking ASIC. We have -- obviously, at the end of the year, we have the server SKU coming out on 10. Interestingly, and indicative of how we're approaching process technology going forward, we also have 10-plus coming out this year. And what we've said is it's important to launch a new node as it is to launch intra-node improvements every year. And so we'll have -- we have our Tiger Lake client product coming out. It's going to be on our 10-plus node. And so I've been told by our client team that I'm not allowed to talk about how much incremental performance is going to come out of that. But there's -- the idea is to have a step function move without having to wait for 7 in between nodes, and we'll be able to talk about that. It's been hard to -- much like this, it's hard to find a conference where we've been able to talk about some of these things, which we were planning on doing, but we'll get the information out.

And then canceling them off?

Yes, yes. But they're not going to let me talk about it first. So it's got to be the right people, the people doing the hard work on the products to talk about it. But so I feel like we're in the 10-nanometer node. It's a -- it's important that we're continuing to see yield improvements ratably over the time period. But as we said back in our Analyst Day in May of '19, look, this just isn't going to be the best node that Intel has ever had. It's going to be less productive than 14, less productive than 22, but we're excited about the improvements that we're seeing. And we expect to start the 7-nanometer period and at a -- with a much better profile of performance over that starting at the end of '21.

Okay. And I mean it seems like this 10-plus is really important, and we can't really get into the details of it. But it seems like the biggest thing for me is from a planning process, it seems like Intel's on a pretty firm foundation. I mean you didn't -- when 10 was delayed, it obviously means you don't have your best foot forward product-wise either. It seems like now, at the very least, the next couple of years, there's a very clear stepping stone road map for where we're going to go.

Yes, I think we feel very good about where the road map is going. I think we also -- one of the things that I think is underestimated, and we're probably as much as at fault for this as anybody because we've always said that it's the CPU speed and power is all that matters. And the fact of the matter is, if you look at our products today, more and more -- pick the data center as an example, more and more workloads are very customized to specific requirements with specific cloud players. And so you have to pull together -- it's not just a matter of the CPU that you have. It's all the other elements from software, to whether you can bring AI into the equation, to some of the architectural elements, how you use memory in the device. All of these things are becoming super important. And they allow you, even if you might not have the CPU positioning you would like at that particular time, for instance, the software on Xeon, coupled with our AI, we get like 10x the performance of the competition on AI-related requirements even with differences in the CPU. So there's -- we bring a lot of capability to the table for our customers in addition to the CPU, and we feel like we're starting to see the acceleration on the process side that we have been talking about to get back to parity in the 7-nanometer generation and regain leadership in the [ product ] down there.

And then just last bigger-picture question. As you think about all these process technology issues, one of the things from the Analyst Day was it's going to have some negative impact on gross margin next year because you're ramping 10, and you're also introducing 7. Can you just talk about -- I mean I know you're not going to get into doing -- updating the 3-year road map as we speak. But can you just talk about that guidance, the gross margin degradation is hard for people to get past.

Sure. No, I mean yes, I had just joined, and so my first presentation was saying that margins would be 57% in '21, is that, okay, maybe a different CFO would be better. But the fact is, I wanted to be clear what was happening during the 10-nanometer generation. The fact is, like I said, it isn't going to be as strong a node as people would expect from 14 or what they'll see in 7. Also, we were at a time when in order to regain process leadership, we had to accelerate the overlap between 10, 7 and then 7 and 5. And so the cost that you're absorbing that -- starting in -- particularly, in '21, you've got this intersection of the performance of 10, the investment in 7, and we're also well into starting the investment in 5, all of those elements just combine to impact gross margin. And what we didn't want to do is just go out 5 years and say, "Hey, we're going to be at an attractive margin picture 5 years out." And then the whole time, people are going, "Well, I don't understand what's happening in '20 and '21, if this is where you say you're going to go." And it really is that curve we had to get through, and we just felt it was very important to just talk about what we saw happening, and we've been able to deliver a little bit better than what we've seen -- than what we thought going into that meeting so far. And -- but still, the effect of 10 nanometer in '21 is just -- it's sort of built today, because that's -- you got to get through that product cycle and the node. We're excited about the products, but the node isn't going to be quite the performer that historically we've had.

Great. I wanted to ask a little bit about just the shape of next year or this year, I should say, that you talked about in the last earnings call. So starting maybe with PCs, a very strong start to the year. I think you're up at the midpoint like around 10% year-on-year. But you've implied in your guidance a significant deceleration through the course of the year. Can you talk about where that's coming from?

Yes. So it's -- what we said was that we were seeing an unseasonably strong first quarter. Part of that, I think, on the PC side, certainly was that we were unable to fulfill all the demand that our customers had in the fourth quarter. And you're seeing demand continuing. But also, just in general, demand that had remained stronger than expected in PCs, and we're starting 2020 with an overall demand level above expectations. So -- but we know the Window 10 refresh is, at some point, going to start to wind down. We think we're well into the refresh. So it's the expectation that some of the momentum from that will start to wane in the second half. We also have our modem business and our CCG business, and we would expect that to decrease a little bit in the second half as we start to see competitive units come in. So the whole shape of that gave us a little different look than we would normally have. And the patterns have been -- the seasonal patterns have been pretty strong. And you could kind of, in many ways, forecast the full year based on what you would see in the first quarter. And this is just going to be a year that if you did that, it would just give a much stronger outlook than we had. The other half of this then, of course, is data center, which, again, has been hot for 3 straight quarters. And there is -- there's a very clear pattern that you get very strong buy, and then you get a digestion period. Now this is not a customer base that provides a lot of forecast because they're also -- they're very demand-sensitive too and want to add capacity as it makes sense. So the ability to forecast when that nose is over, the demand nose is over is quite hard, not only for analysts, but also for us. So our view is, it definitely -- we could only have so many strong quarters in a row before it noses and off, and it looks like that would be in the second half. So we would have this odd, again, an odd pattern, and we just wanted to call it out because it wouldn't be the natural expectation otherwise.

It's not like you're really seeing that digestion period coming so much. It's just more of just pragmatically saying that there's no one way to that.

That's exactly it. It's -- it is our experience that once you get a number of strong quarters in a row, it starts to nose off. But now that -- the pattern there has even been a little bit uncertain. You can have 4-quarter runs. They've had 3. They've had a 7. So there's -- it's not perfectly knowable. But again, trying to just get -- the outlook was already higher than expectation for us. And we just wanted to have it -- make sure that people didn't get too far out based on something that looked pretty uncertain to us.

Yes. Okay. It makes sense. So within the PC business over the course of this year, how are you thinking about market share? Your competitor has a good high-end model, but you also have -- you're coming out of an allocation situation over the course of the year. What do you think happens to your unit share over the year?

Yes. So our -- probably our biggest challenge in market share in PC has really been our ability to supply the market. So, yes, we have strong competition, but we have a client platform that just has a superb track record for our customers. And the performance of the whole system is -- provides a very strong base for our market share. We have -- when we're short, we ask customers which products do you want us to make for you because they have a full range of products. And they -- obviously, they want to make sure they're full at the high end, which means that we tend to miss the lower end of the market where we sell, what we call our small core products into. And so we've been unable to effectively compete in that space during this period of shortage just because we just didn't have the supply. Again, working with customers to make sure they had their preferences first. But -- and so we think as supply normalizes, we're going to be able to go back and compete and take some share back in that smaller core market. Yes, we'll have some competitive dynamics in the higher end, but we feel good about being able to go back and get some share back there.

Okay. And then probably the most asked question for Intel is same question on servers. It seems like you're forecasting some share loss over the course of this year. Where do you see that going?

Yes. I think we've said we expect to see stronger competitive dynamics in the second half of this year. And -- but what we've seen -- we actually thought we would see some of that a little bit sooner. And what we've seen is, again, very strong demand for our leading edge products. And again, not only because many of those products are customized for specific workloads, but our AI capability is particularly strong. And so we do expect there to continue to be strong demand for our products throughout this period, but we do see rising competition. We've planned for that as we talked about our forecast, that there'll be share impacts that we'll have to absorb within that. And then as we look at our product road map over time, we think, again, we start to present an even more compelling competitive position as we go into 7 and 5.

Okay. Okay. So within data center also, you've looked at a lot of different ways of managing new workloads. Other than CPUs, you've made acquisitions in graphics and FPGAs. You just bought Habana. Can you talk about that overall AI machine learning effort? How much of it is CPU-centric? How much of it is driven by these new IPs?

Yes. Got it. So AI is a very interesting potential end market. We think it's -- in 2024, it will be on the order of magnitude of a $25 billion market. We have close to $4 billion in AI-related revenue today. I would say over half of that is related to our big Xeon processors. And then we have, obviously, Mobileye, extraordinary success story there. And the demand for their products keeps growing substantially. And then we have various ASICs and FPGA that support AI as well. We believe it's really early days in AI, and there's not going to be one technology that is the winner. And in fact, the proliferation of AI workloads is growing fairly rapidly. And so what we've seen is in order to engage with customers effectively, not only do you traditionally -- you have to have the traditional way that people think about CPU and GPU is kind of the foundational technologies, but we're seeing, like with Habana, the ASIC strategy where you can, basically, have a programmable ASIC really focused on delivering either inference-type solutions or training solutions, but in a way, it gives the customer more control over how they approach that. And then there's a number of -- we see GPU applications. We also see the FPGA continuing to be an important device, particularly early on as customers are thinking how they want to approach the specific AI issues for their particular needs. And as you think about AI too, I guess if you thought about it only as a cloud activity, you would definitely be focused on the CPU and GPU. But more and more, it's moving out to the edge to getting all this data in. I have got to figure out what's the data that I'm going to need for my particular application. And I don't want to bring that up into the cloud to do it. I need to do it more quickly, screen it more effectively. So you're seeing applications like that. They just are proliferating the types of solutions that you have to bring in. So we're -- we think we're really well-positioned across that array. And we're going to continue to invest in AI. We think that's an area where we can integrate solutions in a way that's quite attractive to customers.

And I just -- I did want to ask you about a couple of other parts of the portfolio, on NAND. You talked about the importance of obtaining storage class memory. You guys have also acknowledged some of the challenges of the commodity side of that business. How are you thinking about that going forward? Obviously, the commodity environment's improving, but you still were trying to find ways to spend less in the sort of commodity side of NAND.

Yes. One of the things that we've said for any of the big bets that we've taken, and certainly, memory and in particular NAND, falls into the big bet category, is that in addition to having differentiated technology and a product that will play a bigger part in our customers' success. We have to have profitability, long-term profitability and attractive returns as an element of that. And I would say for NAND, it really hits the first 2 very well. NAND in the data center is just becoming a more and more important element. And so -- but we haven't been able to generate the profits out of that to get the kind of returns that we would like to see. And in fact, obviously, '19 was a super difficult year. Oddly, one of the tailwinds for 2020 is the improvement in memory year-over-year. And we think there's -- when we look at the demand picture, there's still critical shortages on NAND. So I think that's got a good tailwind with it. But we've said we're going to look at ways of improving profitability, not only in terms of how we manage the business every day, but also in looking at partnerships and other things where we can perhaps improve the overall economics of the investment. So we're in the middle of that process, and we'll keep people up-to-date as we make progress. But we're active in looking at those elements.

Okay. And then last question for me. On the Mobileye business, really good Mobileye Analyst Day in Jerusalem. Seems clear that Mobileye as a company, is hitting on all cylinders. How do you think about that opportunity? It seems like a lot of the opportunities are sort of less around semiconductors and more around systems and software, but it's obviously a very valuable asset, growing very quickly. How are you thinking about how that fits into the Intel portfolio?

Yes. I mean it's -- clearly, it's -- there's a hardware and a software element in the IQ technology. But more importantly, we think the reason we had the Analyst Day is that I think people really weren't seeing, particularly with all the hype around ADAS and other parts of the technology world getting a lot of attention. Mobileye, in the meantime, was basically taking more and more share and becoming the standard for ADAS in the automotive industry. So very strong position, growing share, growing the technology leadership, the gapping out the competition in the eyes of our OEMs. And we -- so we had the Analyst Day to get the people out to, hey, let's show you what we can do, which if you've never taken a ride in an autonomous vehicle in Jerusalem in rush-hour traffic, you spend the first part of it in terror, and because you can't believe this car's going to be able to navigate these cars coming at you from all angles. Nobody seems to follow any of the rules. You've got to merge into traffic and nobody leaves a lane for you, and it's just spectacular to see this car drive. As my friends in Israel say, it drives like an Israeli. And so the first 15 or 20 minutes of it, you're kind of in horror. And then the last 10 minutes is, one of the analysts said me," You know, I was kind of bored at the last 10 minutes," which is the highest compliment I can pay this technology. So they've really come a very long way. But that's really in the traditional markets. They've also looked at, because they have these vehicles on the road with this capability, they are getting tremendous amount of data. And so they're also a huge user of AI to process data. And they've come up with mapping capabilities that feed back -- or kind of a feedback loop to the car itself as it's driving. So it improves the quality of the driving experience because it's got its own set of real-time maps that it's working off of at the same time that it's got all of the other measurement elements. Plus, we're finding that you can sell the data on these maps because we can tell -- we have a case in the U.K. where utility holders are having trouble actually finding where they need to make repairs. But if you have all the mapping data, you can actually tell where utility lines are running, where pipes come underneath. And so we're -- there's businesses like this popping up all over where it's -- for us, it's just using the data that we already have. And for them, it's a remarkable time and cost saver. We also know where every pothole is, effectively, in the areas, and where every pothole is forming. And so cities are now seeing this as an opportunity to buy data that will allow them to go get. So there's the near-term system stuff. And then as you look at mobility as a service, where there's driverless cars, not only will that be incredibly important, but our technology and our investments in the stack, all the way up the stack and mobility as a service, are another area where we think we're going to be highly differentiated as we move to the robo-taxi world, which will be the world that you have to go through before you actually have fully autonomous cars. Why is that? Because robo-taxis are what cities are going to use to determine whether autonomous cars are actually really safe. They can really control, understand what parameters are important, and we're going to be the leader in supporting that. We've already announced some partnerships in that regard already. So Mobileye is probably the best proof case for AI. And we're able to help them, both from a software and an engineering standpoint, keep this incredible pace that they're going. But it's a really remarkable team, and we feel great about the investment.

Okay. Great stuff. Unfortunately, we have to wrap up there. George, thanks so much.

Thanks, everybody.