Ladies and gentlemen, thank you for standing by. Welcome to the Best Buy's Third Quarter Fiscal 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded for playback and will be available for -- by approximately 1:00 P.M Eastern Time today. [Operator Instructions] I will now turn the conference call over to Mollie O'Brien, Vice-President of Investor Relations.

Thank you, and good morning, everyone. Joining me on the call today are Corie Barry, our CEO, and Matt Bilunas, our CFO. During the call today, we will be discussing both GAAP and non-GAAP financial measures, a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and an explanation of why these financial measures are useful can be found in this morning's earnings release, which is available on our website, investors.bestbuy.com. Some of the statements we will make today are considered forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may address the financial condition, business initiatives, growth plans, investments and expected performance of the company and are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Please refer to the company's current earnings release and our most recent 10-K and subsequent 10-Qs for more information on these risks and uncertainties. The company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. I will now turn the call over to Corie.

Good morning, everyone, and thank you for joining us. For the third quarter, we are reporting better-than-expected profitability on slightly softer-than-expected revenue. Specifically, we are reporting a comparable sales decline of 6.9%, which is slightly below our outlook for the quarter as consumer demand softened through the quarter. At the same time, we expanded our Q3 gross profit rate 90 basis points from last year due to profitability improvements in our membership program and better product margins. We also lowered our SG&A expense compared to last year as we tightly controlled expenses and adjusted our labor expense rate with sales fluctuations. During the quarter, we grew our paid membership base and drove meaningful improvements in customer satisfaction scores across many of our service offerings, including in-home delivery, in-store services and remote support. Our Q3 results demonstrate our ongoing strong operational execution as we navigate through the sales pressure our industry has been experiencing for the past several quarters. The sales pressure is due to many factors, including the pandemic pull-forward of tech purchases, the shift back into services outside the home like travel and entertainment and inflation. In the more recent macro-environment, consumer demand has been even more uneven and difficult to predict. Based on the sales trends in Q3 and so far in November, we believe it is prudent to lower our revenue outlook for Q4. But despite the lowered sales outlook, the midpoint of our annual EPS guidance is now slightly higher than the midpoint of our original guidance as we entered the year. I want to thank our associates for their resilience and relentless focus on our customers. I continue to be so very proud of the way our teams are managing the business today and preparing for our future. Now, I would like to provide more…

Good morning, everyone. Let me start by sharing details on our third quarter results. Enterprise revenue of $9.8 billion declined 6.9% on a comparable basis. Our non-GAAP operating income rate of 3.8% declined 10 basis points compared to last year. Non-GAAP SG&A dollars were $57 million lower than last year, and it increased approximately 100 basis points as a percentage of revenue. Partially offsetting the higher SG&A rate was a 90 basis point improvement in our gross profit rate. Compared to last year, our non-GAAP diluted earnings per share decreased 6.5% to $1.29. When viewing our performance compared to our expectations, we did not see the sequential improvement versus the second quarter that our third quarter outlook assumed. From an enterprise comparable sales phasing perspective, August decline of approximately 6% was our best performing month, with September down 7% and October down 8%. Although our sales were below plan, our non-GAAP operating income rate exceeded our outlook by approximately 40 basis points, which was driven by lower SG&A. The lower-than-expected SG&A was largely driven by tighter expense management in areas such as store payroll and advertising expense as we adjusted plans to account for sales trends. Our gross profit rate was essentially flat to our expectations. Lastly, approximately $20 million of vendor funding qualified to be recognized as an offset to SG&A while our outlook assumed it would have been a reduction of cost of sales. We anticipate similar recognition of this funding in Q4 in the range of $15 million to $20 million. Next, I will walk through the details of our third quarter results compared to last year. In our Domestic segment, revenue decreased 8.2% to $9 billion, driven by a comparable sales decline of 7.3%. From a category standpoint, the largest contributors to the comparable sales decline…

Thank you. [Operator Instructions] Your first question comes from the line of Simeon Gutman of Morgan Stanley. Your line is open.

Good morning, everyone. I wanted to ask a question, as we get into the fourth quarter, it looks like we'll have negative comps, and it will be the third year in a row. As you step back, I think there's logic to this massive pull forward and there is a larger installed base. There should be a replacement cycle. But I wanted to kind of question that. And if it throws any water on this, if there's something else happening here, maybe there is a lack of newness. You mentioned that you didn't lose much share, but thinking about market share as well, but thinking about the cycles and whether we're not -- whether we could be in just a negative industry cycle for a little bit longer.

Thanks for the question, Simeon. I think we have a few things going on to your point. So if you think about the comments that I had in the macro section, you've got a variety of stacked issues happening. One is absolutely you had pull forward throughout the pandemic. Two is you also have this kind of sustained inflation. And again, it's sustained inflation on the basics that we've been talking about food, fuel and lodging. And so that's pulling people. We also talked about the fact that a lot of spend right now is geared towards the more service type of things like concerts, like trips. Everywhere you look, people are taking more and more vacations. And so you have all of this kind of shift of spend that's happening. I think secondarily, as it relates specifically to the holiday time frame, the other interesting thing is people have also been buying CE a little bit more steadily throughout the year. If you think about CE as more of a need-based item, not just that kind of giftable item, and so I think there's also just been a little bit of a shift in where people are spending. But I think broadly, what we're seeing reflected right now is the kind of culmination of not just pull forward, but all of these other factors that we're seeing from the consumer as they make those trade-offs. And we've been using the words uneven for probably six quarters now, and I think that is what you're seeing in the variety of results from consumers and where they're choosing to spend their dollars.

Maybe the quick follow-up is the Q4, I guess, you're running at the low end. Does it get better because the comparison gets better? Or you're hopeful around how the big holiday sales end up playing out?

Yeah. I think the comparison certainly gets better. As you think about last year, we were about 3% lower than FY '20 levels. This year, we're lower against FY '20, but the sequential is better in Q4. I think there's still a lot of optimism for holiday. I think there's a lot of great holiday promotions and events. And I think we're trying to temper any expectation on holiday just with the pragmatic view of where the consumer is at right now. And I think you commented on the share. I think we actually -- we say largely held share because it's really hard to actually get a good meaningful number on share, but we feel good about our share position as we go into the holiday period.

Okay. Thanks. Happy Thanksgiving. Good luck.

Your next question comes from the line of Chris Horvers of JPMorgan. Your line is open.

Thanks, and good morning. So, thanks for the commentary around the credit card headwind that you're thinking about next year being offset by the membership. Can you talk about implicitly what you're assuming as a headwind in that comment, there's a lot of speculation. There's a lot of numbers getting thrown around in the market. And so I just want to try to understand what you're implicitly assuming? And then in addition, what are the other big puts and takes in gross margin as you think about 2024, as you think about initiative spending as well as your health efforts?

Sure. Thanks for the question. For credit card next year, I mean, obviously, there's a number of scenarios we're trying to understand as you think about next year. So we're not really guiding next year now. But when we think about the credit card, that pressure that we expect to see, we believe, will largely be offset by benefits we might see from the membership program and services category expanding a bit more from a gross property perspective. The factors within the credit card, one of the biggest things we're trying to understand is just where do net credit losses go. They're -- at the moment, they're pretty close to where they were pre-pandemic. They were very low levels during the pandemic. And so we've been seeing them grow a little bit. And so the question would be how high did those grow if they do grow into next year and what sort of pressure. The other factor to consider is that, generally speaking, our receivable balance is higher than it used to be over the last several years. And so a higher receivable balance and interest income obviously can offset some of those pressures as well. So those are a couple of the bigger things we're trying to understand as we think about the credit card specifically. And as you mentioned, again, for next year, the other puts and takes, again, we're not guiding next year, but that credit card pressure and the membership benefit is one of the bigger factors we're trying to understand. Another one that I would call out would be -- we know that we're going to likely have to add STI expense back in as we're -- we've lowered the expense this year as we reset STI in the coming year to roughly $85 million that we would likely add back. Clearly, where the industry is a question as well to the extent that sales are flat or up, it helps relieve some of the pressure of some fixed costs. Clearly, the level of pressure matters quite a bit next year. If it's a small increase, small decline, it's less significant than is a bigger decline. So those are some of the bigger factors we're trying to think through as we go into next year.

So that's a perfect segue. On the SG&A side, Corie, I know you talked about your NPS scores with purchasing customers and what you're seeing in the store, you've caught what feels like a lot of labor over the past few years or past couple of years. Are there any metrics that you're seeing, whether it's non-purchasing customers, like close rates versus people walking indoor that are concerning to you? And then as you think about '24, given that you've comped negatively for this sustained period, is there just less flexibility to manage the labor component?

So I alluded to NPS being one of the factors that we -- you can imagine, there is a broad array of both operational and then more survey-based metrics that we're looking at, everything from how fast can we do an in-store pick, how good is the curbside experience. We specifically talked about and we can see meaningful improvements year-over-year in product availability, in associate availability, in a variety of products and pricing, and those have continuously improved even as this year has gone on. And actually, we can also see some level of improvement in some of those through non-purchasers as well. So we're watching both sides of this and that sequential improvement is happening across both purchasers and non-purchasers. And yes, we're watching close rate too, and the team is doing a really nice job measuring themselves and showing some progress against their close rate expectations as well. So we are -- literally, we have the almost Rubik's cube of operational and customer survey-based metrics so we can assess. I think what the team has done a really amazing job at is your point around flexibility. You talked about do you have less. Interestingly, now we have associates who can opt into and get certified in not just multiple areas of expertise within the store, but they can also get certified for operations roles and sales roles, and they can actually move between stores within their markets. And so we can flex not just against what's the consumer demand at the highest level, we can actually flex within a market depending on how and where people are choosing to shop. So I can even use an example like in the last week, we've seen a lot more people opting into in-store pickup and curbside and needing a bit more ship from store, and we can quickly then shift some of that labor into those areas, while still trying to strike the balance. We also talked about even moving some of the ship from store out of stores using those automated facilities so that when we do have labor in the stores, it's more customer-facing. It's facing more some of these key areas where we're trying to deliver these experiences. So not perfect and certainly not going to be perfect every single day at every single location, but we really are working hard, and I give the team a great deal of credit for every day monitoring both the experiences and the operational metrics that will tell us whether or not we're delivering.

Got it. Have a great Thanksgiving.

Thanks, you too.

Your next question comes from the line of Peter Keith of Piper Sandler. Your line is open.

Hey, thanks. Good morning everyone. Happy holidays. Nice to see the membership program changes coming a bit more accretive than initially guided. Could you help us unpack that a little bit in terms of the drivers, if it's just removing the free installation or maybe that middle tier is trending a little more profitable than you thought. Maybe curious on what the uptick is from?

Sure. The main drivers of the improvement from a rate perspective are -- there's basically four main areas. The first is the point change to the three My Best Buy program. The second would be just the growth in paid members over time and the recognition of those annual fees. The changes we made to the total tech program, moving it to Total, mainly came through with lowering the cost to fulfill as we removed the free installation that also was part of the 35 basis points, and the resumption of appliance at home theater installation, paid insulation is the other part of the number. The main drivers of it coming better than our expectations are around higher-than-expected paid installation volumes and then also lower-than-expected Best Buy claims and lower Apple premiums than we had expected.

Okay. That's helpful, Matt. And then -- and Corie, I guess everyone is very curious on product innovation and understanding we're kind of in this air pocket with very little innovation. But I'm curious are there any little green shoots that you're seeing in stores, maybe smaller products that we're not thinking about that give us some optimism that newness can drive sales?

Yeah. I actually -- I mean, I might be biased, but I think there's a lot of green shoots that are out there. And you're right, back to the -- one of the first questions, definitely what has also caused the pullback in CE, and I didn't hit it, to begin with, I'll hit it now, is just a bit of a lack of innovation when everyone was trying so hard to produce as much as possible or pull back as hard as possible, we just haven't seen it. Now we are starting to see a little bit of that turn toward innovation. What we can see, even in TVs, we can see there's a lot more interest in those large screen sizes. We can see growth in the like 77-inch plus kind of categories where people want to get that newness. We actually have double the amount of SKUs in the 97-inch and above TV category, which I know sounds insane, but those are really interesting things to people from a true entertaining at home perspective. In majors, there's a brand-new washer/dryer combo unit from GE, so you can both do the washing and the drying in one unit, which is a really interesting innovation for people like me who might want to do two loads at once, full time and get through it all. In gaming, you can see there's really good availability of consoles, with some really interesting new titles that are driving some demand, some handheld gaming from ASUS and Lenovo. Those are great. And then there's kind of some smaller just interesting things. We talked about the Meta Quest 3, the Meta Ray-Ban sunglasses and not only can you capture pictures but has audio built in. And then I think there's lots of just really small fun giftable things, right? There's everything from the automated bird feeder to the automated litter box and everything in between. So what's cool and the reason a little tongue in cheek, we mentioned the Best Buy sells that is there are actually a ton of really interesting fun consumer technology devices. And to your point, they're kind of small, but they're starting to lead the way into what I think will be more meaningful cycles as we head into the back half of next year. As you think about, we mentioned generative AI and products and importantly, chips that geared toward running those kind of large language processing models. And you can imagine that will extend not just into computing, but into other areas. And we can't always talk about everything that we can see on the horizon, but we definitely can see some interesting products as our vendors, as you all know, are just as incented to stimulate demand as we are.

Very good. Good luck with the holiday season.

Thank you.

Your next question comes from the line of Mike Baker of D.A. Davidson. Your line is open.

Okay. Great. Thank you. And this was sort of touched on, but the promotional activity, I think you said it's up. Where is it versus plan? Do you expect it to get more promotional as we get through the holiday season? And you said this year, it will be more traditional, i.e., Black Friday, Cyber Monday, the last few weeks, et cetera. Can you remind us how the holiday played out last year?

Sure. I think strategically -- I think we've done a really good job of managing our promotional plan overall. I think the promotions in terms of the discounts and mix of promotions are up versus last year, and in many cases, up compared to where they were pre-pandemic. Again, it hasn't necessarily manifested in our pressure on our product margin rates because we're still receiving a good amount of funding from our vendors to help stimulate the sales that you would expect us to want to do. I think as you look about the holiday season, I think we are expecting the holiday to be a very sales-driven event. Consumers are looking for deals, and they're looking for value. And because of that, we believe it will look probably more closely to like it was pre-pandemic, where people are gravitating towards the big sale events around Thanksgiving and Cyber Monday and a couple of weeks before Christmas. So a pretty similar cadence to what we saw in FY '20, although in FY '20, we did -- didn't have as much pull forward into October as we likely still have in this current year. So a more similar cadence to promotional events. I would expect holiday always to be promotional, and we are well positioned to be promotional and still maintain a great profitable story for our investors. So overall, I think we're in a great spot.

And just to be explicit, what we actually had said, the promo environment was as expected. It was in line with our expectations in Q3. And you can imagine we're kind of taking -- what we're seeing and pushing that into Q4, but it hasn't been wildly outside our expectations.

Got it. Okay. Thank you. If I could ask one more, and maybe you can't answer this, but you did talk a lot about some crowding out in that kind of dynamic with the higher inflation. Well, now all of a sudden, the inflation concern is turning to deflation concern. Asking you to look into your crystal ball, how that could impact your sales results next year if the inflation goes away and we're more in a deflationary environment?

Yeah. I mean we've been pretty consistent as we've talked about the effects of inflation. We've been pretty consistent in saying, where it's putting pressure on the consumer is because it's in those key basic areas of need, fuel, food, lodging, consumables like the stuff you just kind of need every single day. And that's what's been eating into a lot of that pent-up savings, especially for some of the lower income demographics. And so if you start to get into a world where you see more disinflation in some of those areas, then as you would expect, you start to free up some of that share of wallet for potentially getting back into goods or some of the kind of higher ticket purchases. And so we're watching that carefully. Right now, still very elevated versus especially pre-pandemic, slowing down, and to your point, people start to talk about it, which over time, I think, could present some opportunity for people to move back into the goods space, also, of course, depending on how elevated that spend remains around services and things like vacations and spending outside the home.

Yeah. Makes perfect sense. Okay. Thank you. Appreciate the color.

Thanks.

Your next question comes from the line of Steven Zaccone of Citi. Your line is open.

Great. Good morning. Thanks very much for taking my question. I wanted to ask a question on average selling prices. So it sounds like it was flat, slight improvement. What drove that improvement on a sequential basis by category? And then as you think about the fourth quarter, can you talk about your outlook for units versus ASPs?

Yeah. I -- we'll get into the by category improvement to ASPs. Generally speaking, we are starting to, I would say, lap some of the ASP reduction. We've been seeing ASPs slowly get lower, also the last number of quarters. I think we're starting to lap some of that deflation in that average selling price, if you will. So I think it's probably as much as that as people are gravitating to in some cases, we mentioned that TV is an area of trade down that we are actually seeing. And so those do tend to lower your ASPs because it's a big ticket item. And as we start to lap that, I think you're starting to see some relief on the ASP sequentially. Again, I think in certain areas, so in terms of like Q4, clearly, we've been seeing unit pressure overall, but there are some areas where some of our bigger categories we are expecting the units to improve. We're expecting TV units to increase. We're expecting to see improvements in notebook units as well. So it's a little bit varied, but those are some of the bigger ones.

Okay. Great. Thanks. And then Corie, I had a question. Just thinking about next year, I think you alluded to more stabilization and the potential for growth in the back half. I guess I was curious, how do you see the recovery playing out? We're waiting for the tech refresh cycle. But if the overall promotional environment stays challenging, how do you think about the recovery from market share position or maybe if the consumer is willing to trade down, how are you positioned to outpace the industry overall?

So if I think about how the last year has played out, this industry has largely been in a very promotional stance for over the last year. We've been pretty consistent in saying promos are back to, if not greater, than FY '20 levels. So this is not a new phenomenon for us. So even as we head into next year, we're lapping that. And even in that environment where you've seen that level of promotionality, as Matt said, we've sustained our share position. So I think the team has done a beautiful job positioning us well in a very promotional environment. And I wouldn't be surprised to see that environment continue into the first part of next year. And again, we're lapping that kind of similar environment last year. So it's not a huge change in trajectory for us. I think what starts to make the back half, in our view, potentially more interesting next year is really a function of the innovation cycles. And we can start to see a line of sight toward even read a little bit about, especially on some of the computing and processing side, devices that might start to feed into that as we head into the back half of next year. And back to Peter's earlier question, we can start to see on the horizon, some of that newness and innovation really on the docket as you head into the back half and into holiday for next year as everyone again, it's pretty incented to want to bring some vitality back to the industry.

Thanks very much for the detail. Have a nice Thanksgiving.

Yeah. Thanks. You too.

Your next question comes from the line of Jonathan Matuszewski of Jefferies. Your line is open.

Great. Thanks for taking my question. First one is on the competitive landscape. So you held market share in 3Q, and that's consistent with your comments in the first half. Obviously, you guys have superior customer service and assortment. So what's driving the success among competitors in the industry, who you're tracking who are taking share? Is it purely a function of price? And how is that informing your pricing strategy over the next couple of quarters?

Again, I'm probably biased, but I don't think it's purely a function of price. I think we've been very clear, we have to be price competitive, and that is one of the base tentpoles of our strategy. And that said, we also, I think, have a team that has a proven track record of very adept promotional planning around key drive times, whether that's some of the secondary holidays or whether it's the main holiday that we're headed into. So I kind of think of price as the like primary tentpole. But in order to differentiate, I think what we're doubling down on is what we do, that is different than anyone else just given who we are. We are agnostic to the customer. So we don't care what the operating system is or who makes the hardware. We're there for the customer to help them to build on that. We have what we like to call human-enabled services. So we can help you in the store. We can consult for you in your home. We can repair. We can take back. We can trade in. You can buy open box. You can go to an outlet. Like, we just have the huge end-to-end variety of solutions all the way from inspire to support, so that's the kind of second differentiator for us. And then third, I think we're building on those things with a unique membership program with unique offers that reach out to our members with a membership program that's based on the things that we uniquely do well. And then fourth, I have to give major credit to our vendor partners as well, even though we're in a little bit of a slower innovation cycle, they remain closely committed to our success, which means we do have everything from the most new beautiful 98-inch TV that's out on the floor, all the way to those opening price point Chromebooks or opening price point televisions that might be right for you at a value play. And I think our ability to showcase those high and new experience as well as all the way through the rest of the assortment really is that last differentiating piece for us.

That's great color. Thanks so much. And then a quick follow-up on Best Buy Health. You've had some exciting announcements on that side of the business in terms of partnerships in the industry. At the Investor Day, I think you called out expectations for that to grow at a CAGR of an impressive 40% over the next couple of years. Is that business at scale to switch from kind of dilution to accretion in terms of the overall enterprise next year? Any thoughts there would be helpful.

Yeah. So we remain really excited about the Health business, and we were pretty clear that we had pulled the FY '25 targets on the whole or as the macro backdrop has changed. And so we are, of course, working behind the scenes to really fortify that business for the future. And I know someone had asked earlier as we think about the puts and takes for next year, we would continue to expect Health to become more accretive, and we laid that out as kind of our structural thesis at our Investor Day. And that part of the thesis remains true for us. And while it still is relatively small at this point, we are seeing some nice uptick, particularly in that kind of care-at-home side of things, where we've announced partnerships with Geisinger and with Atrium Health as we think about how we can use our unique Geek Squad assets as well as the unique product assortment that we have to help deliver care at home. So again, relatively small, but the team is doing a nice job continuing to ensure that, that part of the business is accretive and grows over time.

Thanks so much.

Your next question comes from the line of Steven Forbes of Guggenheim. Your line is open.

Good morning, Corie, Matt.

Good morning.

Matt, you briefly mentioned 15 to 20 basis points of vendor funding being recorded in expenses. Curious if you can maybe give us a little more color there? And then any sort of different way of thinking about how vendor funding maybe supports the margin outlook for 2024? Or are you changing the 2024 margin color of being able to hold margin in a flat sales environment, any update there?

Sure. Yeah. So first of all, it was $15 million to $20 million of impact on net basis points, just to make sure I'm clear. And that would carry on as you get into next quarter Q4 and the first part of next year. And this is strictly a geography. There is no change to the overall financial statements, if you will, just moving as a cost -- offsetting a cost of sales to offsetting SG&A. Essentially, we get any number of types of vendor funding for a number of different things. And when we can actually be more specific with the funding, matching and offsetting the specific cost, we then record that as an offset to SG&A versus offsetting cost of sales. So that's specifically what's happened. And it's just -- it's part of the funding that we get not all of it, obviously. And so we would expect that to continue. To your second question, as you look at next year, at this point, we're not guiding next year, but we would expect product margins to be somewhat of a neutral impact to next year. Overall, we don't, at this point, see a lot of material changes either way. We have a very strong relationship with our vendors, and they are obviously as interested in us in stimulating sales and showcasing their products and innovations that they have. So at this point, we don't see any change to that as we look into next year.

Matt hit on this, but I want to underscore, the way in which our vendors participate with us varies as you would expect, depending on what we're seeing in the macro. Sometimes that shows up as more promotional partnership. But a lot of times, that shows up in very different ways it can be in how we think about specialized labor, it can be in store experiences like we mentioned on the call, it can be in our Best Buy ads business or in supply chain fulfillment or in services. And I think what's important is our overall level of invested support has grown in the aggregate even as we compare it to pre-pandemic levels. And I think that is the part that for us as important is how can we be the very best partner to our vendors as we collectively want to bring, especially some of this newer innovation to market.

Thank you, Corie and Matt. Maybe just a quick follow-up for you, Corie. Any updated thoughts on maybe some of your newer growth initiatives such as device life cycle management, really just trying to think through whether the current sort of operating performance or challenges that are out there are impacting the investments you plan to put behind some of these initiatives? Or whether that's still sort of a growth sort of plan for next year?

Yeah. As it relates -- you hit on specifically device life cycle management, I'm maybe going to take it up one level and that is, we've talked about Geek Squad as a service, because it can be everything from device cycle management, which is newer side of this, but also just providing service on behalf of vendors as you think about being an Apple authorized service provider or some of our Best Buy business offerings where we actually use our service profile to go out and do installations writ large. What's nice about an initiative like this is it doesn't require, especially in the earlier stages, much incremental investment. We already have Geek Squad City, which is a very large facility, well staffed with trained experts who we can leverage some of their capacities in order to deliver on something like device life cycle management. Now then we can make decisions as something like that ramps. We didn't mention it this quarter because in Q4, honestly, it's not the biggest front and center area of focus. But you can also imagine behind the scenes, if there are other ways for us to leverage our existing expertise and capacity. Those are very interesting strategic initiatives for us. And we remain excited about this one. We remain excited about the pipeline that we're seeing in this one. And obviously, I think you can expect that we will update you with more clarity as it develops. So with that, I think that -- thank you. I think that is our last question, and I want to thank you all for joining us today. Thank you for the nice wishes. I hope you all also have a wonderful holiday, and we look forward to updating you all on our results and progress during our next call in February. Thank you, and have a great day.

This concludes today's conference call. You may now disconnect.