Universal Display Corporation (OLED) Earnings Call Transcript & Summary

My name is Atif Malik. I cover U.S. semiconductors, semiconductor equipment and networking equipment stocks here at Citi. It's my pleasure to welcome Brian Millard, CFO, Universal Display. We also have Darice Liu in the audience as well, friendly neighborhood IR. I'm going to kick it off with my questions first and then I'll give an opportunity to the audience to ask their questions. If you have a question, please raise your hand and the mic will come to you. Welcome, Brian. .

Thanks. Thanks Atif for having us.

Brian to kind of kick off the things. If you can give us the state of the union on the adoption of OLED, where do we stand in TVs, IT, smartphones? And also if you can touch on your full year outlook and how is the year so far panning out?

Sure. Yes, thanks. Before I get started, I'll just like to say that I may make some forward-looking statements today as part of my remarks and our actual results may differ materially from those. So we'd encourage everyone to look at our SEC filings before making any investments in the company's securities. As it relates to the key segments that you mentioned, smartphone, TV and IT, we're seeing a lot of opportunity for growth across all three markets. I'll kind of step through each individually. If that's helpful. So starting with smartphones, right now, more than 50% of the smartphones that are sold globally have OLED displays on them. That was something that we announced on our call last month for the first time OLED display shipments exceeded LCDs earlier this year. So that's a key milestone and one that we see continuing to grow in the years ahead. All the premium models are -- substantially all the premium models of smartphones today have OLED displays. We've seen additional penetration in the mid-tier market. And even now some of the lower-end smartphones that have a lower price point are also adopting OLED displays and as OEMs sit down and introduce develop their next-gen road maps and products adopting OLED display is a great way of differentiating their products and continuing to increase the penetration rate for us. And so we see a lot of opportunity for that. And also the AI functionality that's expected to come to many of the new smartphone models coming to market. We believe that also drives a replacement cycle, which should benefit us and the smartphone market in the near term. The TV market is one that has had a little bit of a rocky road the last few years, but we've seen this year roughly 20% growth in units is the estimate for TV units. LG Display is our largest customer in the TV space with their white OLED TV. Recent estimates or they're expecting to sell roughly 6 million units of that TV this year, and that's up roughly 20% from where they were in 2023. So a lot of opportunity for that to continue to grow. The rate of growth in the coming years, we certainly think there's room for that to grow off of where we are today. But we see almost the most significant rate of growth in the IT market. And IT, we define as laptops, tablets, monitors and the like. And right now, we're roughly 3% to 4% penetrated or thereabouts. There's been a number of leading OEMs in the last few quarters who have announced the adoption of OLED displays into their IT products, namely tablets and laptops. And so we see a lot of opportunity for that to continue to grow. And that's one that a lot of the industry analysts estimate that by 2030, roughly 20% of the IT market should be penetrated with OLED displays. And there's a number of leading OEMs that have multiyear road maps in the next few years based on our understanding to adopt those -- OLED displays into their IT portfolio. So -- those are kind of the summary of the top three markets, all of which we see a significant growth in the near term as well as the long term.

Can you remind us the outlook for this year? And how is this full year sales track so far?

Yes. So our guidance that we updated last month is $645 million to $675 million, so the midpoint being $660 million for 2024. We also have projected and guided for strong profitability, 76% to 77% total gross margins and 35% to 40% operating margins. And through -- the difference this year compared to the historical pattern for our company is we expect that the first half and the second half are going to be pretty balanced to this year and pretty even with one another, whereas historically, we had much more of a second half orientation to the business. And so that's -- those are the key things as it relates to '24. .

All right. Just starting with the smartphones. I know it's the most penetrated segment out of the three markets. We saw the news that Apple is going to introduce all OLED phones next year, even on the iPhone SE. And everyone is excited about Apple intelligence and AI generally on smartphones and in AI, it does consume a lot of power. Do you see a strong case that the adoption of AI will accelerate the adoption of OLED in smartphones or not so much?

It's a good question. I think maybe not and the only reason is I think a lot of the smartphones that will first adopt AI probably already have OLED displays in them. But I think certainly, the key thing that we're focused on from an AI perspective is how do we continue to increase the energy efficiency of the displays and enable our customers to continue to increase the energy efficiency, which then allows that power that's freed up from the display to be used for AI and otherwise as well as, as I mentioned earlier, the replacement cycle that we expect to occur as consumers want to purchase those new phones with the AI features.

Just kind of zoning on IT with the Apple launching its OLED-based iPad this year, we saw a big uptick in sales for them. Can you touch on the upcoming opportunities beyond the tablets? And how should we think about the level of penetration in IT in 5 years. And also if you can touch on auto end market. .

Yes. So in IT, there's a number of embedded factors that are at play here. The most significant being a number of our customers have announced new capacity investments that they're making for the IT market to meet the demand of where the industry is going in the next few years. So Samsung Display announced a capacity investment around April of last year of '23, and that is a Gen 8.6 fab. They're spending roughly $3 billion to retrofit that fab. It's expected to come online in 2026. BOE also announced last year a similar sized Gen 8.6 fab, it's actually going to have double the capacity of Samsung's and they're spending roughly $8 million on that fab. So a lot of investment being put into the IT market. And our customers certainly aren't making that level of investment without having a good understanding of where the OEMs product road maps are going over the next decade and beyond to make sure that, that's the right play for them to make. So there's a number of proof points that this IT adoption cycle is real. And as you mentioned, the iPads, iPad Pro models going OLED in Q2 was a key milestone. Our expectation is that not just Apple, but other OEMs have plans in the future to continue to further adopt OLED displays across their IT portfolios. Dell just recently announced a new -- a new notebook that has on OLED display, Microsoft Surface Pro models also recently went OLED. So there's -- on a quarterly basis, there continue to be a good drumbeat of news related to OLED display adoption across the IT landscape.

And Brian, just curious, the adoption of OLED larger panels for tablets and autos, how is the kind of the cost scaling down when you move through larger panels. Is that a driver in terms of the adoption? Or is it more of the consumer appetite for better-looking screen and power management and those things. Like what's the driving force? Is the cost curve coming down for higher adoption .

It's really around product differentiation, I think, is the key value that OLED displays are bringing at this point. I mean the rich colors, the true blocks, the viewing angle benefits of OLED displays relative to LCDs is the reason why you're seeing a lot of these premium IT products start to adopt OLED. These new fabs coming online should also enable more scale, therefore, better pricing for OEMs as more volume can be put through and our customers can do things to leverage price differently. But today, an OLED display is certainly more costly than an LCD display for the OEM. So it's really around how do they differentiate their product, how do they create more energy-efficient products. OLED displays are great for that. And that's really why we've seen the adoption that we have and why we expect to see it in the future. To your point on automotive earlier, I forgot to respond to that. I mean, I think Automotive is a key adopter of OLED as well, specifically the EV market. You've seen a number of leading EV makers across the globe, U.S., Europe and Asia, adopt OLED displays into their EV products because of the energy efficiency. And so if you can have a more energy-efficient display that unlocks a lot of opportunity for battery life and range and what have you. So that's a key driver. There are some non-EV autos that have OLED displays, but it's primarily in the EV segment. We've also seen lighting, specifically tail lights go OLED. So Audi, there's a recent announcement that Audi, both their EVs as well as some of their non-EV models are going to have OLED tail lights in them. So that's another key way of having the visual benefits of OLED come to play.

Let's talk on the topic of energy efficiency. Let's talk about blue. And I feel like when we entered this year, there was definitely excitement around adoption of OLED in IT, like iPAD and there was excitement that we'll hear maybe Blue Phosphorescent getting adopted this year. On your last earnings call, you kind of pushed it out a little bit into next year. Now there was an article in, I believe EV times yesterday talking about one of your Korean customers making very good progress with it and he talked about maybe within a year to get into production. And I know you can't comment on your customers' plans. But can you just walk us through where -- first of all, what happened with the delay and then what are your latest expectations on kind of ramping production on blue?

Yes. So the first and most important point, I think, is our excitement for this project has not wavered whatsoever. We continue to be on the right path. The time line has been pushed out. As you mentioned, we had previously said we thought in 2024, we would have performance, commercial performance of our material, and that would then enable our customers and the OEMs to introduce it thereafter. We did update on our call last month to say that we think we're going to need more time beyond this year and that additional time is going to be measured in months and not years. This continues to be a matter of this is when and not if phosphorescent blue gets commercialized. But there's really complex aspects that come up as you approach the last stages of R&D and something as complicated as this. And that's really where we are at this point where -- there's just more work and more time than we need. We continue to work with all of our major customers on phosphorescent blue development projects. As you mentioned, there was some recent reporting out of Korea. We can't confirm or deny any of those reports other than to say, I did reference some customers of ours having positive experience with our material in their development efforts. So we're working closely with all the major customers, and they're all pursuing various plans as well in terms of how they plan to introduce it.

And Brian, I ask you this always, but can you help remind us that kind of the content increase that you would see -- dollar content increase or some qualitative measure once blue gets adopted. And the reason I ask that is I read the article and there was some mention that, that customer is mixing florescent with phosphorescent, florescent for the lifetime and phosphorescent for efficiency. So I'm just kind of going through the scenarios in terms of like how meaningful of a content driver blue will be for you guys once it gets in production.

Yes. So there's a number of variables to that question. The first being quantity, I think, is what we're getting to, prices is another element. But on a quantity basis, right now, in a red, green and blue side-by-side display like your smartphones. There's roughly double the quantity of 2:1 green to red. So green is double the quantity of red. In the future, we would expect that a blue materials incorporated. The quantity is fairly similar to what you have for green. So you'd have kind of 2:2:1 in terms of ratio of green, blue and red. On price, we don't have pricing set for blue with any of our customers. We have exchange points of view on pricing with certain customers at this point. There's not a lot of urgency to assign those agreements at this point because we're still focused on getting the commercial performance where it needs to be. And once we're there, we're confident that we'll be able to reach the right agreements with our customers.

And also, if you can remind us, is blue already designed into the licensing with these existing customers or it's not included or it will be layered on top of those .

So all of our agreements, except Samsung, already incorporate blue in their IP. They have portfolio license agreements that encompass all of our IP. Samsung's license agreement expressly excludes blue at this point. So we also would need to enter into an additional license agreement with Samsung for blue, and then with everyone for a material supply.

All right. Just on blue, do you have any sense of what the design cycle of blue will look like. Once it starts to get into production, are they more derivatives of blue that can be added on? Or is it just one go and then you're all set? .

Yes. I mean there's -- in terms of the life cycle, there's going to be continued evolution and invention of new blues. So what we bring to market initially is going to be very different than what we bring there after. And also, a key point is what exactly the adoption curve looks like is very hard to weigh in on at this point either. So there's a number of things that need to play out over the next few periods of time here before we have exact insight into exactly what those life cycles look like.

And on the cost side, how would the cost structure look like for you guys? Do you have manufacturing capability lined up in precursors and all that stuff.

Yes. So our manufacturing site in Shannon, Ireland, which we operationalized 2 years ago in the middle of '22 is when we brought that site online. That will be the primary manufacturing location for blue. We'll probably have a secondary source in the U.S. But we've already gone through a process of specking out what that needs to look like. So we're not concerned about capacity constraints. We need to get to a final material though, before we can fully go through setting up all of the supply chains. We've been -- certainly have supply chain set up for the development material that we've been producing to date and selling to our customers. But once we have commercial performance, we need to make sure that all the raw materials that are needed to produce that we have it's going to be more costly certainly initially to produce compared to our red and green material because of the complexity of the molecule itself, the various materials that we need to produce it, as well as the fact that anytime we do something new, it's certainly more costly initially until we can improve yield and improve from there. So we believe the price will be reflective of the fact that there is an additional cost involved in producing it.

And so on the margins, will blue be kind of additive to the gross margin structure or just support the existing structure?

That's certainly the approach we're taking, but it's very hard to land on commercial pricing and have a better understanding of cost to exactly opine definitively on that. But our position is certainly that we've made significant investment in research for this project over many, many years. We need to make sure there's an appropriate return on that investment as well as making sure that it's reflective of the pricing, also reflects the increased complexity in manufacturing. .

And then from a value proposition, I know this is your customers' decision, are you expecting blue to be adopted in smartphones and TVs and tablets all at the same time? Or you think there is a bigger pull for smartphones first.

We believe it has applicability across all applications. And we have customers who have told us they're evaluating it across a number of different applications, not just smartphone or just IT, what have you. And so it has broad applicability. In terms of what's first and is it everywhere all at once. I mean, I think it's probably logical to assume that a customer and an OEM will work to bring it to market in something first, and then it will go on from there. It's probably not everywhere all at once at the same time, but we certainly believe it has applicability across all form factors, and we believe there should be and will be significant adoption of it over a period of time, but it's very hard to weigh in on exactly the slope of that curve at this point since our focus is really on getting that commercial performance achieved that then enables our customers and the OEMs to have a conversation on how it gets introduced. The key value proposition or one of the key value propositions of phosphorescent blue is the energy efficiency. So you could say on that basis, it might make most sense that it's first in some battery power device whether that be a smartphone or an IT application or otherwise because of that energy efficiency and that, therefore, enabling the OEM to do different things with the design if there's energy efficiency created in the display. But hard to say right now, just based on the fact that our customers are still in the R&D phase as we are.

And one question I get asked is like how will we find out that blue has been adopted? Like will you put out a press release? Or there will be some teardown of some phone that you will find out -- others will find out that now it has blue phosphorescent? Or do you expect your customers to advertise it that there's superior OLED screen using blue? Like how do we find out? .

Yes, it's a great question, and it's one that you're probably not going to hear first from us because of the fact that we have to be very sensitive to not get in front of our customers in terms of talking about their technology and their road map and when they're introducing what materials. But certainly, there's a lot of buzz in this industry and news that gets reported, and I would suspect that once one of our customers has designed that into something commercially that, that gets out, whether intentionally or otherwise from them. But we're focused on keeping our head down, doing the work we need to do, supporting our customers, enabling them to be successful in commercializing this material, which we firmly believe will happen. And then the communications piece of it is something that is probably more likely to come from them because of the reasons that I mentioned.

Okay. And just on this topic, I think it will be helpful to the audience, if you can kind of simplify for us the 2 different approaches RGB and white OLED and why would one customer adopt it and the other customer not do it? What are the kind of pros and cons? .

Yes. So the various architectures that are in market today for with OLED technology are what we call RGB, right, green and blue side-by-side. So that's really all the smartphones have RGB technology. The IT products also have, in large part, RGB, some of the larger-sized monitors are white OLED or Quantum Dot OLED, but RGB is universal across smartphones and predominant in the IT market as well. And then in TVs, you have two technologies that are in market today, one is the white OLED approach, which is LG display technology. And they are unit-wise 6 out of the 7 million units of OLED TVs that will be sold this year are coming from LG Display using that white OLED architecture. And then the third being Quantum Dot OLED, and that's Samsung displays technology where they have a blue fluorescent OLED background today and then there's Quantum Dot for the colors. And so we think that as it relates to blue, taking blue across all three of those different applications. Certainly, in RGB, phosphorescent blue can be substituted for the fluorescent blue they're using today. In white OLED, they're using a fluorescent blue. There's a different variety of different ways you can create white color. But you could -- if you're using fluorescent blue phosphorescent blue will be substituted in that -- and then on the QD OLED, the blue fluorescent that they're using in that technology certainly could be substituted with phosphorescent blue in the future is our expectation. So it has applicability across each. It's probably most likely going to be first in an RGB would be my guess as of right now. But ultimately, we think it has applicability and will be used across all.

And then going back to the cost side, are you also planning to provide the host for the blue phosphorous or just the molecule itself. .

So we've been selling development quantities of host. So the blue sales that we report on a quarterly basis, that includes both emitter and host. Emitter is the vast majority of it, but there have been wholesales every quarter. And we are bringing that to market for our customers to evaluate our host and our emitter in connection with one another. We are very aware of the fact that the host business is a much more commoditized market. Certainly on the red and green side, we would expect the same in the blue market in the future. And so we're approaching it cautiously in the sense that -- we want to make sure we don't put a lot of excessive investment in CapEx and resource into setting up a host business if our customers choose ultimately to use our emitter and somebody else's host with it. And so we're evaluating that, bringing solutions to our customers, ultimately, it's the customer's decision, which materials they select. We firmly believe our emitter is in there. The approach that's being used by all of our customers includes our emitter. On the host side, it's possible that they use ours or possible use somebody else's.

And is that what you did red and green in the past as well, like you -- it kind of helps accelerate adoption if you provide them some initial host and then they can move on to whatever they want to use. Is that -- is it similar? Or is it there something different about blue?

I think the difference from then to now then being 10-plus years ago when green was brought to market when we had a green host business is the industry has evolved significantly since then. There's much more players in the industry, providing host solutions. We did have a greenhouse business back when we first introduced green emitter. And what we saw over a number of years, was that business kind of quickly went away to other players. And so that's why we're taking the learnings of that experience and applying it to today to make sure that as we approach blue, we do so cautiously putting our best foot forward, making the pitch for why our blue host is the best solution to use with our blue emitter, but also acknowledging that there are other people out there. .

Let me pause here and see if there are any questions in the audience.

Just on revenue. You mentioned a lot of opportunities. It's been a bit lumpy. It's gone from low single digit to like 20%. So how should investors really think about growth moving forward considering the television, IT and all of the drivers that you spoke about. Some color on that will be pretty helpful.

So when you -- just to clarify, when you say revenues being lumpy, were you referencing our materials revenues or what?

Just like to sales in general, like licensing has been pretty stable, so mostly materials would be the case.

Yes. So we -- if you look over the last few years, 2022, we had $617 million in revenues. 2023, we had $576 million. So there was a downturn in revenues last year. And that was really driven by market factors, macroeconomic factors, the TV market being challenged last year, the OLED TV market as well as the TV market more broadly. And then the consumer demand and sentiment last year not being great either. Heading into this year, at the midpoint of our guidance, it's roughly a 15% increase in revenues from '23 to '24. So a lot of growth opportunity heading into this year. And that's tracking more or less in line with the market in terms of what the growth in units are across and revenues are across the industry. Our revenues are also impacted by new customer agreements are put into place. We typically have 5-year deals with our customers. And we have to look at what the average selling price of our materials and our license are going to be over that 5-year period. And so when we have new agreements come into place and the industry is growing and the volumes in a forward-looking 5-year period are going to be much greater than they were over the prior period. You do have some ASP pressure that comes into play because of that volume pricing that we have in all of our customer agreements. But on a unit basis, we've seen significant growth this year and also projecting significant growth in revenues.

It sounds like the IT opportunity has kind of become the new growth driver, previously had been TVs. Can you size it? You used to give like a [ bone ] equivalent penetration rate, like what's the 3% to 4% IT penetration rate in kind of cell phone screenage equivalent .

Yes. It's a good question. It's a little difficult in the sense of different IT products have different sizes. So it's how many -- it's really square inches, right? So if you scale what's an average number of square inches on a smartphone, what's the average number on a -- is it 4 to 5x or something like that. The markets are much differently sized, right? You've got smartphones being $1.2 billion, $1.3 billion depending on the year in terms of units with more than 50% penetration. And then you've got an IT market that's in the 400, 450 range depending on the year and roughly 3% to 4% penetration. And as I said, the screen size being really the challenge if you think about that 3% to 4%, are you talking about 13-inch, 11-inch models and how you get there. But I think the key point in IT is, as I said earlier, there are embedded factors that are under in motion with our customers, bring on that new capacity for where they see OEMs going -- the -- also the fact that many of these IT products use what's called a tandem structure, which has 2 emissive layers in the display. So the iPad Pro models that were introduced in May of this year by Apple, they have a tandem structure. And Apple actually branded it as tandem OLED in many of their marketing materials. And that has not probably not 2x or material, but somewhere between probably 1.5 to 2x the quantity of our material in one of those displays compared to a single layer and so that's also an additional incremental opportunity for us in the IT market above and beyond a single. Going forward, we expect there's probably going to continue to be a mix of single layer and tandem OLED in the IT market. But tandem is certainly one that OEMs, Apple being the most recent example are using to differentiate the product. The brightness is much greater with a tandem structure compared to a single layer and as many other benefits in terms of the lifetime of the display as well .

Brian, China is a big part of the LED market, both manufacturing as well as consumption. And we continue to hear about smaller private companies working on phosphorescent emitters. And can you give us a an update in terms of like your intelligence, like what's happening in China? Is there some sort of a risk from these kind of indigenous manufacturers. .

Yes. So we certainly keep our eye on the landscape across the board. China as well as globally in terms of other companies that could be competitive with us. I think the key thing is our materials, the breadth of our patent portfolio with more than 6,000 patents, the customer relationships that we have with our customers, the quality of our materials being exceptionally high. The performance also being exceptionally high. Our customers and the OEMs always want the best things. And if you want the best, you're going to come to UDC and that's the position that we have as it relates to potentially competitive solutions. So we don't -- while there is certainly a bit of a drumbeat locally in China for more localization of materials and local supply of things. We've not seen to date any significant impact on our business. And we believe that the quality of our business, the quality of our materials, the strength of those relationships will carry forward as well

And one thing I kind of struggle with is like when I look at your materials growth, like what benchmark we used to look at the industry growth in OLED is it -- like what do you guys use like display search or like -- or some fab tracker? Like what -- how do you -- like on the consumable side, we have wafer starts. So if a company is top line is exceeding the wafer starts and they're outgrowing the market. So how should we gauge you versus some benchmark .

Yes. I mean there's a number of leading companies that publish research routinely on the industry. We subscribe ourselves to many of those companies' research and that we leverage that intelligence as well as our own team on the ground. We have significant teams in both Korea and China who meet regularly with our customers, understand the trends that they have in their own products and what they're hearing from the OEMs and we do, as I said, certainly lean on the third-party information as well to help come up with really our longer-term planning. Our near-term planning in the 6- to 12-month time frame is really entirely internal, working with our customers and our field teams to estimate what the next 12 months are going to look like. And then beyond 12 months, it gets a little bit blurry in terms of the information that we get directly from our customers. And so we have to turn to leverage a little bit more of that third-party data.

All right. And then OVJP, can you give us an update, state of the union, where you stand, your partnerships, how how much R&D are you investing in this project? .

So OVJP for those that aren't familiar, is a dry printing process that we have developed and that RGB architecture we were talking about earlier, where you have red, green and blue subpixels right next to each other, autosubsrate. . The way that, that is produced today for a smartphone is using a vacuum thermal elaboration process. So there's shadow masks and they deposit the material onto a substrate. What OVJP is trying to do is enable that red, green and blue architecture on a very large area of display, like the size of imagine a 70-inch TV or the likes of that. And currently, the vacuum thermal evaporation process has not yet been able to be scaled to that size of substrate for [indiscernible] reasons and otherwise. So OVJP has very efficient material utilization because you're actually drive printing directly on to the substrate. We've recently -- our most recent technical progress that we announced in May was being able to print 8K resolution, 160 PPI using our OVJP system, and 4 years ago, we set up a subsidiary in California in Santa Clara. And the team out there has been focused on scaling up the technology. We now have a Gen 4 system on the floor there and a lot of R&D progress that we've made over the last few years. As you said, we've consistently said -- we are not an equipment company nor do we think that we should become one. But we developed this technology. We wanted to get it to a place where it was at the right point of talking with customers and with other strategic partners. We've had many of those conversations. We continue to have those conversations. And I think there's a lot of interest in the technology. A challenge that we're having is there's a lot of focus right now from a CapEx investment perspective on the IT market with the TV market really having sufficient capacity for the next few years of growth. But we're continuing to advance the technology, advance our R&D efforts and have our team work closely to move that forward. .

So this equipment will be inserted in the existing manufacturing of TVs? Or is this a kind of a brand-new manufacturing scheme .

It's a new manufacturing scheme. There are elements of the existing fabs that would be leveraged or could be leveraged, but you're basically replacing certain elements of the line with an OVJP equipment system. And as I said earlier, it's more efficient from a material usage perspective. We also believe it's more efficient in terms of the upfront CapEx investment to install one of these systems. And you might ask, why does the materials company want more efficient material usage, that seems counterintuitive. We believe that it will enable greater adoption and penetration of OLEDs in the TV market. So it will be an enabler and net-net, a significant positive element for our business. .

And do you have any evaluation units at your customers? .

We do not today. We have had customers come and tour and see our facilities, so they have an understanding of the technology, but we've not yet deployed a system to a customer. .

All right. Just lastly on the balance sheet and capital allocation. Can you just talk about the use of cash. You have no debt and the capital allocation?

Yes. So as you said, we have a very strong balance sheet, approaching $900 million of cash on our balance sheet at the end of June. And we are really focused on how do we grow the business. And whether that's internal investment in R&D, making sure that we're going after the right targets in that perspective, looking at areas adjacent to display or in display or organic electronics that our team's expertise and know-how can be leveraged. Those are things that we're looking at from an internal R&D perspective. We also do look at acquisitions. We've acquired a number of patent portfolios over the years, not necessarily significant business acquisitions, but we're open to those as well if we see an opportunity that looks right for us. And we do prioritize returning capital to shareholders. We've done that through our dividend program. To date, we've had a dividend program in place for a number of years now and have routinely increased that, and we aspire to continue to increase that going forward. We do routinely evaluate buybacks, but it's not something that to date has been a priority of the board or the management team.

Great. We're almost out of time and wrap it up here. Thank you, Brian, for coming to the Citi conference. .

Thank you.