Welcome to PTC 2016 First Quarter Conference Call. [Operator Instructions]. I would like to turn over the conference to our host, Mr. Tim Fox, PTC's Vice President of Investor Relations. Please go ahead.

Good afternoon. Thank you, Winna and welcome to PTC's 2016 first quarter conference call. On the call today are Jim Heppelmann, Chief Executive Officer; Andrew Miller, Chief Financial Officer and Barry Cohen, EVP of Strategy. Today's conference call is being broadcast live through an audio webcast and a replay of the call will be available later today on our investor relations website. During this call PTC will make forward-looking statements including guidance regarding future operating results. Because such statements deal with future events, actual results may differ materially from those projected in the forward-looking statements. Information concerning factors that could cause actual results to differ materially from those in the forward-looking statements can be found on PTC's annual report on Form 10-K, Form 10-Q and other filings with the U.S. Securities and Exchange Commission as well as in today's press release. The forward-looking statements, including guidance provided during this call, are valid only as of today's date, January 20, 2016. And PTC assumes no obligation to update these forward-looking statements. During the call, PTC will discuss non-GAAP financial measures. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found on today's press release, made available on our website. With that, I would like to turn the call over to PTC's CEO, Jim Heppelmann.

Thanks, Tim. Good afternoon, everyone and thank you for joining us. Let me begin with a brief review of the quarter. We were pleased to begin FY '16 on a solid note. Bookings of $69 million were near the high end of our guidance range. Revenue of $292 million was within our guidance range and EPS of $0.50 was far above the high end of guidance. However, it's important to note that we delivered these strong revenue and EPS results despite a significantly higher subscription mix than we guided to. In fact, had our subscription mix been the 18% that we guided to, our revenue would have been above the high end of our guidance range and EPS would have been even higher. Offsetting the impact of the higher mix of subscription, EPS benefited from a more favorable tax rate in the quarter as well as good expense management. All in all, this was a solid start to the quarter -- or to the year. As we discussed during our Q4 2015 earnings call, we anticipated that the tough macroeconomic conditions facing us in the back half of FY '15 would persist into FY '16. At that time, we also built incremental caution into our outlook to account for our reorganization and realignment activities and to account for potentially smaller average deal sizes from the subscription business model transition. While we were pleased to deliver strong results relative to our guidance, our year-over-year bookings performance does not reflect what we believe are significant underlying strengths in our in our business that will drive long-term shareholder value. In order to maximize long-term shareholder value, as we discussed in our FY '16 analyst day last November, there are three key initiatives we're focused on. Number one is to increase our top-line growth.…

Thanks, Jim; and good afternoon, everyone. Please note that I'll be discussing non-GAAP results unless otherwise specified. Total first quarter revenue of $292 million was down $35 million year-over-year, as reported. The decrease in total revenue was driven primarily from a $21 million impact from FX and an $11 million constant currency decrease in professional services, consistent with our strategy to migrate more service engagements to our partners. A higher mix of subscription bookings which is a positive for the business over time, also negatively impacted in the quarter. Bookings of $69 million were near the high end of guidance. On a year-over-year basis, bookings decreased 7% in constant currency, consistent with our expectations, primarily driven by PLM in the Americas. With weak macroeconomic conditions in the industrial markets, particularly in the Americas, we had fewer large deals in Q1 last year which accounted for the decrease. Despite a significantly higher mix of subscription bookings in our guidance, software revenue -- which consists of license, subscription and support -- was still within our guidance range, albeit at the low end. Subscription bookings comprised 28% of total bookings versus our guidance of 18%. This higher mix of subscriptions resulted in lower license revenue than our guidance of approximately $7 million. Adjusting for the higher mix, our total revenue would have been approximately $300 million which would have been above the high end of our guidance. Subscription ACV in the quarter was $11 million, ahead of our guidance of $6 million. On a reported basis, software revenue was down 8% year-over-year due to the impact of currency, a higher mix of subscriptions and lower bookings. Excluding currency and mix, software revenue was down 1%. Approximately 80% of our Q1 software revenue was recurring, up from 75% a year ago. Clearly, this growth…

[Operator Instructions]. Our first question is from Sterling Auty from JPMorgan. Sir, you may ask your question.

Let's start with the macro. You gave a lot of good detail, but I think it's still on everybody's minds and I know it's very difficult to quantify, but looking at some of the macroeconomic indicators, what are the things that we should be looking for to tell how much you have actually factored into the guidance and when we should be concerned that maybe additional steps might have to be taken in terms of estimates?

Sterling, it's Jim here. I don't think we see any meaningful disconnect between the situation we're all reading about and kind of what our plans were. I think if we go back to our November analyst day, we were quite pessimistic on China. We had been watching that situation slow down for some time. We were also quite pessimistic on the U.S. You know, the strong dollar has really been problematic for U.S. industrial companies. And at the time we felt pretty good about Europe and China and I mean--

Japan.

I'm sorry, Japan. Thank you, Andy. It's an important correction. And that's kind of how we read the situation today. So I think maybe the rest of the world caught up to a perspective we shared with you back in November. And I think as we sit here today, we don't see the situation different from the guidance we had given you.

I think that's great. Looking at the subscription side, you mentioned how the solutions group saw good SLM and PLM performance. Just kind of curious, when you look at the pipeline, do you think it's going to start to balance and see even some CAD come into it? So what does that pipeline of interest in subscription look like? And then, just on the IoT side, did you actually do any perpetual deals in the quarter?

Yes, so actually CAD wasn't very far below the SLM. And, in fact, our channel -- even though our focus was on the direct side, our channel was in the high teens as far as their subscription mix percentage. You know, that's 80% CAD/15% PLM. So CAD, frankly, was in the high teens as far as the percentage of the business that was subscription. So that seems to be moving along well also. And as we shared in our prepared remarks, the Americas in total was in the mid-30%s as far as what percentage was subscription and Europe wasn't far behind, in the low 30s%. So we're seeing good execution on the subscription front. And when we look in the pipeline, we're actually seeing subscription building more -- which, of course, those deals will close as they age and mature in the latter part of the year. And some are even in the next year time frame. The other thing that I highlighted on IT, we did have one pretty sizable deal -- it would classify as what we used to call a large deal. That was perpetual this quarter.

It really came from a customer who was adding to a previous perpetual purchase.

Exactly.

And with an add-on purchase, it's a little challenging to change the business model.

Exactly. The rest of that business was, frankly, pretty much all subscription at this point in time. So we're really pleased with that. And the other thing that Jim highlighted was while our conversion program really has only been something the sales force has known about for just over two months and of course, it takes a while to do it -- we're seeing very strong early indicators of how that could really add some value to the company, especially the pipeline as we move forward.

Our next question is from Matthew Hedberg from RBC Capital. Sir, you may ask your question.

This is actually Matt Swanson on for Matt. Following up on Sterling's questions, you mentioned the challenging macro environment. Is there any potential with the smaller deal sizes and the lower upfront costs of this accelerating the subscription transition?

Well, I do think for a company who wants to move forward with a project in a difficult economic environment, the subscription model is more palatable. You know, I don't think we could say that affected our results one way or the other in the past quarter. But I think in general, that's the benefit of the model. Because in the perpetual model, you know, there's a big incentive for the long run to do a big buy upfront in order to get a discount level that makes your business model where your value proposition, let's say, worked the way that you want it to. But then it's difficult in a difficult environment make that big purchase. So I think the subscription model allows you to get started and then layer in more later and later get the benefit of bigger discounts if you want to make bigger commitments. But upfront you don't have to commit yourself to that.

And then, obviously, this was a very strong quarter, it sounds like, for the subscription transition. And I was just wondering, since the Q4 update and the analyst day, what kind of general channel reception you've been getting on the strategic direction and if there's any necessary changes to the channel promotions to accelerate the transition?

So, you know, because 80% of the business, 75%, 80% of the business is direct, of course, our program is focused on the direct side. And frankly, it's a little bit -- we have to make it more channel-friendly. But despite that, what we're hearing is the channel partners, frankly, understand and for the most part like it, according to our internal surveys. And they also like the conversion program, because obviously that helps them from a cash flow perspective get over the hump. And to be in the high teens this early in the program, when really our focused was on the direct side, was certainly a very, very strong start. So just like our direct sales reps, our channel sales reps need to learn how to sell monthly payments. But that's the kind of thing -- once people figure it out, it's great. Oh, would you like this extra module? It's only $199 a month or something like that. So it gives them easy way to continue to upsell and get into the accounts. So we're off to a good start. Even though it wasn't our primary focus, we're off to a good start, feeling good about it. And it is, frankly, a major focus area as we move into the current quarter next quarter.

And if I could just add one more quick one, I know most of the restructuring was done here in Q1. Now that you've seen it, do you have a better idea of what sort of annual savings could happen from the 8% headcount reduction?

Well, we gave that last quarter -- that we expect the net savings to be about $17 million, because part of that restructuring was done, number one, to enable us to invest in other parts of the business, including to have Vuforia be non-dilutive to our results. And another piece of it was to fund our bonus programs that -- you know, for the executives who were not funded last year and for the rest of the employees who were only funded to a small percentage. So this year we have it significantly higher. If we achieve our performance objectives, our plan has a much higher compensation element in there. So we wanted to be able to do those while still making operating margin improvements, absent the subscription mix transition. Okay?

Our next question is from Ed Maguire from CLSA. Sir, you may ask your question.

I wanted to ask, what is behind the outperformance, as it were or higher mix of subscriptions? Was it a surprise to you? And was there -- is there any particular type of customer or product that you're seeing a faster-than-expected subscription uptake?

So we didn't communicate to our sales force all the changes in the details of our subscription program until the very beginning of October, because we didn't want it to slow down Q4 business. And so what we saw is -- you know, we do incent our sales reps to sell subscription over perpetual, as well as -- we re-bundled the products; we repriced the products. And what we have seen is the sales force, while still having to learn how to sell subscription; to learn the plays; learn how to handle objections, all those things, they clearly are motivated to move to subscription which is something that we believed would happen which is why we designed the comp plans that way. But knowing how quickly it's going to happen and how influential they're going to be on, frankly, taking deals. Q1 deals for the most part were pretty much built last year. So how aggressively they could change those into subscription was obviously a big question. So we're pleased with the progress is all I can say. And the color I'd give you is that -- so PLM was the most subscriptions, followed by SLM. And CAD was only, like, a couple hundred basis points behind as far as how much of that business was subscription. And, of course, IoT is primarily subscription, but we had a large perpetual deal. By geo, I already highlighted the Americas and Europe. We saw, believe it or not, in APAC -- excluding Japan -- we saw many-fold increase. Tim, do you recall the number off of the top of your head? It ended up -- go ahead.

Yes, it went from the low single digits to the high teens year over year.

Yes, in the first quarter. And it often takes longer to get a program implemented in Asia than it does in the Americas or Europe. Japan had a very large perpetual deal, so they were in the single digits as far as the percentage of their business that was subscription. But their pipeline looks good. So, you know, one quarter doesn't make a trend. And we're not calling victory after one quarter, but we're certainly pleased with how the program has taken off.

And if I could ask about the Kepware acquisition, how that fits with your partnership with GE and whether you are able to -- if you could discuss a little bit about their model; how much of a subscription component there is to it; and whether -- what changes you're expecting to make in the overall sales effort to fold them in; and what potential synergies could come from that? Thank you.

Kepware is a nice acquisition. Again, what they provide is software that allows you to connect to equipment, especially when all that equipment didn't come from one single vendor. So each vendor has sort of a proprietary way to connect to their equipment. So if you're running a factory or a sewerage treatment plant or an oil and gas refinery or something like that and you have equipment from many different vendors, then you're just kind of scratching your head, saying, what should I do? And all of those vendors are pitching a story to you about just buy from them which, of course, isn't practical. So that's where Kepware fits in. And Kepware has strong market share in terms of being able to solve the mix vendor problem of infrastructure coming from many companies. Many of the companies who provide this infrastructure, including GE, license Kepware. So in fact GE is already a partner of Kepware and this just simplifies that partnership. Many of the other big suppliers of equipment also use Kepware, because they need a solution when a customer says, well, how are you going to connect to all the stuff I didn't buy from you? And the answer tends to be Kepware. So Kepware has a fairly low-touch sales model. A tremendous amount of this stuff is sold over the phone and transacted over the Web. It's a simple product that works well; it doesn't require a lot of consulting or anything like that. So we think it's a good model that scales profitably. It's a well-run company. And this is business that -- it has, I don't know, somewhere between 15,000 and 20,000 customers. We're going to be able to introduce ThingWorx to those customers as value-added to how they are using Kepware. And in the meantime, we're going to be able to use Kepware to kind of strengthen our proposition anytime we or partners like GE go into an environment where there's infrastructure already in place from multiple vendors and we have to figure out how to make it all work together in an industry 4.0 type of play. So it's a great little acquisition and good piece of technology to have in our portfolio.

Our next question is from Steve Koenig from Wedbush Securities. Sir, you may ask your question.

I'll just try to keep it to two here. One is really around the subscription, the transition to subscriptions. Can you give any color on what drove the customers to take the deal, the subscriptions, in the core business? And also, what drove the maintenance customers to convert? And related to that, are you able give us any sort of quantitative help on how much of the 10 points of upside in the subscriptions mix came from the conversion program?

So it was 12 customers. So that was a small amount of the upside. You know, we did all those market studies with McKinsey and they shared -- the data that we got from those was that more than 70% of customers prefer subscription in every vertical, every segment, etcetera. So it's not surprising that a properly priced subscription offer that is being pushed by your sales rep which has more attractive bundles than perpetual, that over time our customers are going to move to that. The reason why we believe our transition is going to be a three-year journey is because of the fact we have 30% to 50% of our revenue with our largest customers, their renewal cycles tend to be every three years. And so it will take us three years to get through all of those. We did a lot of work to make sure we came up with product bundles and pricing that would hit our -- you know, kind of the demand elasticity curves that our customers have. And I think that's why they picked it. And it's the same things we went through at investor day as far as what they are looking for. But fundamentally, they like the flexibility subscription gives them. The other part of your question is on the conversion. What we do is we let them take kind of their static support agreement which is for the software that they happen to have, that they probably bought over years; and we let them move to a more flexible model, where they can remix. They get all the benefits of subscription that they don't get from support and that's worth something to them. You know, they might have a bunch of shelfware of a module that they bought to add on top of CAD, but their mechanical engineers want a different module. And we let them do that mix/remix for a premium. That in the first quarter was 25% to 50%. Go ahead, Jim.

Steve, I was just going to say, kind of in summary -- I was going to make this point earlier; I might have stepped on Ed. You know, when Andy joined us, he put in place, together with his team, a pretty thorough program here that looks at this from every angle. The sales rep wants to do it, because they're going to make more money. The customer probably has some tendency towards subscription anyway; but then we're giving him more flexibility and some more attractive bundles and so forth. So there's been a lot of thought into how to align the planets to make people either want to buy new in a subscription model or take a renewal and flip it over into this new model. So I think we're off to a good start, but it's fundamentally because there's a great program here. And that's something that Andy brought to the company and one of the things we were looking for when we hired him.

And if I could follow up with one other question, amidst the good early start on your subscription transition, IoT probably deserves a little more attention too, here. And I'm wondering if you can give some color on what is driving the IoT growth and trends in the business. And ending the quarter, you know, you called out the perpetual deal, but anything else that's driving good growth here with ThingWorx?

I think if you look at IoT, you know, you can look at it from two perspectives. The main perspective that we think about is new logos. It's an early market and in an early market, market share is everything. And so we've been running a land-and-expand type of go-to-market program which is a little new for us, quite frankly. And so we've really pushed on new logo acquisition. And that's where you see the most impressive data. New logo is up 55%, I think it was. So that's great news. And it's really coming from all angles. We have the direct sales force selling IoT into the traditional customer base. We've got numerous partners, separate and distinct from the PTC sales force, also selling the technology platform around the world. And they're having success. So I think lots of push to grab market share. Then if you look at it other ways, bookings and revenue, if you look at bookings, it's a little more confused, because in the year-ago quarter we had a number of exceptionally large transactions; and this quarter, only one. So from that standpoint the deal size, the average deal size was much different, but really weighted by the fact that last year's business was dominated by a fairly small number of much larger transactions. And this year's business is actually much healthier. It's a much broader set of transactions with more realistic and sort of sustainable transaction sizes. So I think all things considered, it was a pretty good quarter. And it keeps us sort of on track with where we're trying to get which is to outgrow a market that is reported to be growing around 40%. So we feel pretty good about it.

Yes. The other thing I'll add is we did beat our internal plan on IoT. So we feel good about where we're at, but we're always trying for more.

Our next question is from Saket Kalia from Barclays. Sir, you may ask your question.

So I just want to start higher level. How much of the subscription mix in solutions is coming from maybe the larger blue-chip manufacturing customers that we've seen PTC historically sell to versus some of the smaller customers that maybe appreciate the financial flexibility a little bit more -- if there is a way to break that out, even qualitatively?

So qualitatively, we had some large subscription deals in the quarter. And we look at the pipeline and we have large subscription deals in the pipeline. So of course a larger deal, I think the pipeline is more indicative, because the larger deals -- we've only had the current program in place for a quarter and deals take longer than a quarter to mature and turn into a close. But we have some larger deals in the quarter. And as you look at the pipeline, the pipeline is looking good with both large and small. You know, there are some of our large customers we know are still trying to figure out what they think of a subscription business model. And so, you know, that's simply the way things work in large industrial companies, because it's -- the idea they're going to pay for it forever is something that they are still trying to figure out, is it better for them that way or not? So that's the only thing that I'd say is still out there.

Yes. Well and the thing I might say Andy, to balance that out is we had pretty good success at the other end in the channel. So I think it really is -- customers of all sizes are, over time, moving toward a mindset that subscription business is a better way to purchase software. And we're simply aligning with that and putting in place the lubrication that makes it happen.

And then for my follow-up, just to zero in on the 2Q guidance for mix a little bit, I think the guidance is for 26%. So slightly down quarter over quarter. And it sounds like we'll have a full quarter of maybe that converting existing customers, right, from maintenance over to subscription. So what were some of the other factors that might take that mix down slightly quarter over quarter?

You're talking about the subscription mix?

Right.

We basically kind of do a high-low midpoint of where it could end up. And at this point we thought 26% was appropriate, because we only have one quarter behind us. So there are more risk and how much of the business is going to be subscription. There's no trend there. The trend as we look in the pipeline, especially as we look to Q3 and Q4, is an increasing mix of subscription as the year progresses.

Yes. And let me be clear on the maintenance or support angle, what kind of happens there. So let's say we have a customer who has a maintenance contract that's due for renewal and they are going to pay us $1 million to renew that maintenance contract. And we get in this discussion of -- maybe we ought to just convert this whole relationship to subscription. And they say, tell me about it. And by the time the discussion is done, we've convinced them to sign a $1.5 million subscription agreement. So what we would do is take $0.5 million and call that a new booking. And the $1 million we were going to get anyway, we just simply move out of the deferred maintenance revenue bucket. And we put it in the deferred license revenue bucket and don't really report it to you. So what's happening here is -- behind the scenes, behind the curtain -- is every time a maintenance booking shifts to a subscription booking, then that kind of backlog in deferred revenue also switches over to software which will then help software revenues in the future. But, of course, we'll lose it out of maintenance revenues in the future. So that's happening behind the scenes and it's not currently in our disclosure. Maybe at some point in time we'll have to add that. But right now that's just a level of detail that seems unnecessary.

So it's really the customers that are going to be converting from maintenance to subscription -- you're only recognizing or classifying as a new booking the incremental amount, above --?

Exactly.

And I tried to get Andy to change that. He refused.

Our next question is from Monika Garg from Pacific Crest. Your line is open.

Just a follow-up from the last question's answer, Andy. When you were saying that your large customers are still kind of thinking about how to think about subscription and perpetual -- so given that one of your European peers is going to offer both subscription and perpetual offerings, do you think there could be risk that some of your customers start moving towards that peer?

Well, first off, we offer both subscription and perpetual also. We didn't take it away specifically for that reason. So we offer both subscription and perpetual. So for those customers who prefer perpetual, they can still buy from us. And I do want to clarify, I said some of our large customers, not all of our large customers. We're seeing, both in the pipeline and in our closes, large customers buying subscription.

And then as a follow-up, last quarter you kind of talked about the channel had a very strong performance. Could you give us more kind of -- or talk about details of performance --?

Yes, once again, so the channel which you know, 80% cash, 15% PLM, grew in the low single digits constant currency this quarter. So another good -- and made their number. So another good, solid performance by the channel.

Our last question is from Jay Vleeschhouwer from Griffin. Sir, you may ask your question.

Jim, in your prepared remarks you alluded to the industrial market. When we look at the supplemental data that you provide now each quarter, there was an interesting stability in the percentage of revenues across your markets, automotive, industrial, etcetera, sequentially and year-over-year. Could you talk about your expectations behind your guidance in terms of the various verticals? What are you seeing, for example, in your automotive pipeline; your electronics pipeline; life sciences, etcetera? Then a follow-up or two. Thanks.

Yes, Jay, one thing I would caution you is that this data can bounce around a lot depending upon big deals. So, for example, thinking back to the quarter that just closed, normally I would think that business is tough right now in the aerospace and defense business, you know, federal aerospace and defense business, because federal is tough. And the low oil prices and the sustained low oil prices has taken some gas out of the aerospace companies. But at the same time, simply because more fuel-efficient aircraft are what drive sales, but that becomes less important when fuel prices are so low. But nonetheless, we landed a big deal from a commercial aerospace customer who happened to really like our Servigistics software for spare parts management in their service department. So we had a pretty significant transaction and that business looks great. But I'd say in general that's a space that's sort of hard to thrive in right now. I don't know. I think it's very difficult to discern from the pipeline, because the geo factor is so important here. You know, the industrial pipeline in Europe would look a lot better than the industrial pipeline in the U.S. and so forth. So I think it's actually almost easier to do this by geo than it is by vertical because right now the economy is not, in my view, really favoring any one of those verticals over another. They're kind of all in the same spot and it's really favoring one geo over another. So I don't think I can really answer the question to the extent you want me to.

One product question and one customer question. The product question is, one of the interesting attributes of Windchill 11 is the role-based apps which echoes what you did from the beginning with Creo, of course. Could you talk about what the effect of role-based apps could be on either the ARPU of Windchill or perhaps even the size of the active base of Windchill? Could it expand the user base, for example, for Windchill? And perhaps might it also still do the same for Creo?

Yes, so role-based apps in the case of Windchill 11 are implemented in this technology called Navigate which incidentally happens to be built on ThingWorx. So ThingWorx is a really fantastic way of mashing together a quick user interface to solve this problem for this person or this problem for that person. So what we've done with Windchill 11 is, kind of like, built those mash ups; but then supply you with ThingWorx so that you can reconfigure them if you want without writing any code and so forth. So it's sort of a way to demonstrate the power of ThingWorx by creating a much more usable experience for Windchill and a more usable experience for Windchill opens it up to a much wider audience within a company to the extent that Windchill is kind of viewed as the same product experience, no matter who you are when you log in, then some of the more casual users say, wow, that's a lot of menus and picks and I'm not sure where to go with it. But to the extent we can simplify it down to just what is necessary for someone who does this type of job and simplify it a different way for somebody who does that type of job, then I think it actually opens up a lot more users within the already installed customer base. That's really what we're trying to do here. So I think it definitely creates new seat opportunity. Of course, these new users tend to be more casual. So, yes, probably the price that these casual users are willing to pay is a little less than what the, let's say, more engineering-centric users upstream might've been willing to pay. So it probably creates more seats, but those seats come at a lower average seat price.

And then finally, I'll call out to that user question. As you were preparing to make this change, you suggested to us that there could be instances where an existing customer might recast or resize their numbers of seats. You might still get the same amount of revenue, but the number of seats might in fact decline and we've seen that from time to time in the past and that you would audit the customers more. Could you talk about that process in terms of what you're seeing so far with customers perhaps changing the size of the base, but you are keeping your revenue and how that's playing out?

Yes. I think the place that would come into play, to the extent it does, would be if we converted a maintenance run rate, you know a support run rate over to a new subscription. Now, what's important to know, as I told you, we only report the incremental part as a new booking. But we also only pay commissions on the incremental part as a new booking. So from the perspective of the sales guy, I've got better things to do than do renewals that are the same size or smaller. There's just no point in doing that. The maintenance guys will renew it as a maintenance contract, but you won't get a sales account manager involved in the conversation like that, because it's sort of an empty conversation for them -- which is by design, by the way. So I don't think you're ever going to see is flip any meaningful amount of contracts from the support forum to the subscription forum without growing them. Now, as we grow them, are there situations where there could be more revenue and less seats? I suppose, theoretically, but practically there wouldn't be many of them. So I don't think this will be a significant factor in our performance.

All right. Sounds like that's the end of the questions. So I want to thank you all for joining us here. Appreciate all your questions and comments and so forth. We do feel like this was a decent quarter overall and a very good quarter in terms of launching our Phase 2 of the subscription business model. So we're feeling strong about that right now. And we're working hard and look forward to talking to you in 90 days, if in fact, we don't get a chance to talk to some of you at our ThingEvent which is going to be a very big, exciting event. If you happen to listen online, it's going to take about 90 minutes start to finish. So it's not a huge commitment, but definitely, if you're interested in learning more about what happens when you put together a mix of augmented reality and Internet of Things and CAD and SLM, what happens? You're going to see lots of great examples from real customers who are super excited about what we're doing. So, again, I look forward to seeing you in 90 days. And hopefully we'll have another good report for you. Thanks and good evening.

Thank you. That concludes today's conference. Thank you all for participating. You may now disconnect.