Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the PTC 2016 Fourth Quarter Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be open for question. I would like to turn the call over to Tim Fox, PTC's Vice President of Investor Relations. Please go ahead.

Thank you. Good afternoon and welcome to PTC's 2016 fourth quarter conference call. On the call today are Jim Heppelmann, Chief Executive Officer; Andrew Miller, Chief Financial Officer; and Barry Cohen, Chief Strategy Officer. 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 as to 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 in 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, October 26, 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 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 in today's press release, made available on our Investor website. With that, I'd 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 review of the fourth quarter and then provide some perspectives on the significant milestones that we achieved in fiscal 2016. Those investors, analysts and journalists who take the time to look beyond the headlines and understand our business model transition will see that by nearly any measure, Q4 was a very good quarter, which capped off a very strong year for PTC. In Q4 we continued our momentum by executing well across all of our key objectives, both strategic and operational. Bookings of $142 million were $21 million or 17% above the high end of the Q4 guidance we provided in July. Late in the quarter we recorded an SLM subscription booking of $20 million that was not in our guidance due to deal timing uncertainty, but please take note that even without this transaction, we still would have exceeded the high end of our bookings guidance. We delivered a subscription mix of 70% for the quarter, which would be 65% excluding this $20 million deal, but either way far ahead of our Q4 guidance target of 46%. We'll provide additional details on the subscription transition throughout the call, but suffice it to say our program gained further traction in Q4 and we're now more than a full year ahead of our transition plan. Given the substantial upside we delivered this quarter on subscription mix, naturally, our reported revenue and EPS were below our guidance range because, again, we deferred significantly more license revenue into future quarters than we had projected we would. However, the long-term value that the subscription model yields for our business and for our shareholders far outweighs the short-term upticks in our reported results. I know you all understand and…

Thanks, Jim, and good afternoon, everyone. Please note that I'll be discussing non-GAAP results unless otherwise specified. Bookings of $142 million were $21 million above the high end of guidance provided in July. On a year-over-year basis, bookings increased 34% in constant currency and 29% excluding Kepware. Excluding the SLM mega deal, which was not factored into our initial Q4 guidance, bookings still grew 15% constant currency. Subscription comprised 70% of total bookings versus our initial guidance of 46% and versus 20% in Q4 2015. Excluding the SLM mega deal, subscription mix of 65% was 19 percentage points above guidance. Subscription ACV in the quarter was $50 million, well ahead of our guidance of $25 million to $28 million, even after accounting for the SLM mega deal ACV of approximately $10 million. I would like to highlight that the strong subscription results in the quarter and for the full year contributed to a significant increase in our total deferred revenue, billed plus unbilled, which increased year-over-year by $185 million or 31% to $783 million as of the end of fiscal 2016. Subscription adoption trends were consistent with Q3, where we saw strong performance in every segment, every geography, and in both our direct and indirect channels. In our solutions business, SLM was 90% subscription; PLM, which in the low 70% range and CAD ticked up sequentially to the mid-50% range due to part to continued progress in our channel. In our direct business, subscription mix was 80% and excluding the SLM mega deal was 75%. And in the channel, subscription mix increased 600 basis points sequentially to 41%. Regionally, the Americas, Europe and Japan far outpaced the Pac Rim, where adoption trends continue to lag the other geos. Q4 subscription mix benefited from our support conversion program launched in Q1…

Thank you. We will now open up the question-and-answer session. And our first question is from the line of Steve Koenig of Wedbush. Your line is open now.

Hi, Steve.

Hi. Hi, everyone. Thanks for taking my question and congratulations on the quarter.

Thank you.

Great. Maybe one question and one follow-up, if that's okay. Last time when I asked it, I think you all – it sounds like you'll have more detail on the long-term for us at your Analyst Day. Maybe the one thing I might ask you right now is can you give us any color on the contribution from maintenance conversions, either in the quarter or how to think about that on a full-year or long-term basis? What's a good way to think about that?

So at this point, we've done 89 conversions this year, 33 in the fourth quarter. And we think that the first phase of this will play out over multiple years, and it's probably amongst the top 400 to 500 customers where we expect to continue to be able to get from 25% to more than 50% as we convert them from maintenance to subscription off of, frankly, a lower than market maintenance rate today. We're also analyzing the kind of the next group of customers that we could have an attractive subscription offer for so we can continue to run this play for many years to come. One thing that's interesting is more than 25% of the conversions are customers that frankly you wouldn't expect would have converted. They converted simply for the flexibility that they got by moving to subscription. They didn't have a huge – we didn't have a huge stick, for example, to help incent them to go ahead and convert. So that's interesting. But we're currently doing the analysis to look at – obviously, we have many years left to go to run the 400 to 500 customers, and we think there's an opportunity, frankly, at different levels of incremental ACV for much of our current 27,000 customers. And we're doing the work to analyze what that opportunity might be and what the offer might be that we could make even small customers potentially buying through the channel. So we're doing a lot of work on that. We clearly know how much we've booked from a subscription program. It's hard to say how much was incremental because if the reps weren't selling conversions, they hopefully would be selling something else. But it is a great incremental value. It is a great long-term model for the company, and it certainly is something that is starting to get traction primarily at this point in the Americas and Europe. We still have the rest of the world that a sales enablement enablement perspective.

Steve, if I could, just to give a completely different perspective on it, because I ask the same questions. I think our bookings growth was strong and we say, well, what are the primary factors and what are the secondary factors? I think the primary factor, of course, is what's going on in the macroeconomic world. And then secondarily, our own execution against that opportunity. So if you want to say what's the number one thing PTC did to drive pretty good year of bookings growth, we executed better. Now you drop down to the secondary factors and that's where you get pricing and discounting. We discounted less across the board on average. We did have this conversion factor, and we have this new cloud factor, which is a stream of bookings and revenue we used to not get when we were just selling perpetual on-premise licenses. So, again, I think the primary factors are what's the macroeconomic and our execution against it. And these secondary factors, there's a collection of them, one of which is the fact you're asking. But as Andy said, it's very hard to assign a quantitative number to that one factor, but it's definitely a tailwind that's good to have. And we'll be here for a while, by the way.

Got it. Okay, great. That's helpful. Maybe the one follow-up on that is any sense of the size of the maintenance, the average maintenance contract for those top 400 to 500 customers? And then, if I may, the follow-up I did want to ask as well was the guide for fiscal 2017, we had expected that because of the heavy commissions for subscriptions this year, there might be some pull-forward into Q4, say, from a Q1. And also any potential sales reorg in Q1 could be impactful. But your Q1 guide looks pretty good. How did you think about that when modeling it?

So, two things. First off, we've said in the past that we think these largest customers probably represent about 40% of our maintenance base, but as I mentioned, we see opportunities much more broadly in our maintenance base. And on the second question, when we do our guidance, we do quite a bit of analytical work around historical close rates. Every way you cut it, the maturity of the deals in the pipeline, all that stuff, and we use that to come up with what our internal forecast is, which is our basis for the guidance. So, our guidance to you on bookings is always very quantitatively based looking at our sales funnel, frankly.

Right. We take the forecast. We do a lot of analytics against the pipeline to make sure that forecast is supported by the pipeline. We compare it to last year to a typical Q1 to – we triangulate – I'm not sure triangulate is the right word because there's more than three different angles on it, but we try to make sure it's a reasonable, safe number to put out there and the fact that it looks good, that's your determination. I think it's simply because that's what the data shows us.

Very good. Well, I appreciate the answers and congratulations again.

Yeah. Thank you, Steve.

Thank you. And our next question is from the line of Ken Wong of Citi. Your line is open.

Hi, Ken.

Hi. Hey, how's it going, guys?

Good.

So, first question, maybe as we think about the fiscal 2017 subscription mix of 65%, I mean, clearly last year you guys outperformed your initial target by 30 points there. How should we think about the level of conservatism you guys might have baked into that number? And I'm sure the range isn't going to be that wide, but what was the thinking here?

So as always, we base our subscription mix assumption on what we see in the pipeline. We don't think there's – yeah, it's prudent to get out over the front of our skis. So we base it on what we see in our pipeline. Our comp plans are right now being – at this point being given to all of the sales reps. We continue to have differential compensation for subscription versus perpetual. In fact, frankly, the difference is a little bit bigger in FY 2017 than it was in FY 2016, so it favors subscription a bit more. In addition, the channel incentives favor subscription more than they did last year, so we're focused on both of those, and that we're basically going to give guidance based upon the data that we have.

Yeah. Again, to give you a slightly different perspective on that. We can't likely outperform by 30%, again because that would mean we get all the way to 95%, which is virtually impossible. So we don't have as much runway to outperform as we did the past year. And then the other thing is, if you go back to the beginning of fiscal 2016, almost 100% of the pipe was perpetual. So there was a big skew to over-perform as these deals flipped to subscription; but if you look at the pipeline right now, there's a fair amount of subscription in it. So there's a factor here that we're starting from a baseline that's probably more accurate than we were working with last year, and with every passing quarter that should be increasingly true to the point where at some point, it'd be very difficult to outperform at all because we would be very far down the runway. But to Andy's point, we're using the same formula we used last year. That formula served us well. It is a conservative approach, but it worked well last year so we're sticking with it.

Got it. That's perfectly fair. And then on OpEx, you guys are growing, I think you said, 1%. How should we think about the appropriate spend CAGR going forward? And did you get some benefit from the restructuring in 2017 and this ticks up higher in 2018? Or is 1% about the right run rate?

Well, what we're focused on is continually increasing that operating margin when you look at a mix adjusted operating margin by 100 basis points to 150 basis points on the way to a low-30s operating margin as we exit the transition. We definitely plan to go into this in more detail on November 8, where we'll kind of lay it out for you, how the subscription transition impacts this and what you can expect from both a reported and kind of a mix adjusted basis. In general what we said is that in the core business, last November we said the core business OpEx should grow in the low-single-digits and in the high growth technology platform group, our IoT business, it should grow at about half the rate of the bookings growth. And that will give us a very strong operating margin, double-digit revenue growth, and operating margins in the low-30s as we exit the subscription transition. Okay? So stay tuned for November 8, and we'll give you more specific guidance around that.

And just to be clear, the 1% was in part because we're backing out this commission overspend, and we won't have that luxury every year. So, Andy's suggestion could be higher.

So if we back out of last year's the commission overspend, then our growth rate would be around 3% in OpEx, which on a midpoint of our software revenue growth of 7%, mix adjusted. Our whole thing is that OpEx should grow much slower than the top line.

That's always a good thing, and I'll let you guys save your thunder for November 8.

Okay. Thank you.

Thanks a lot, guys.

Thank you. And our next question is from the line of Sterling Auty of JPMorgan. Your line is open.

Hi. Hi, Sterling.

Hey, you guys. So it seems like the stock saw some undue pressure due to the article that was in the Wall Street Journal. My takeaway from reading it was an implication that just the subscription transition is just a way of hiding a bad business or a business that's getting worse, anything that you can specifically point out relative to how the article was written versus the reality of what you're seeing in the metrics?

Yeah. I thought somebody might ask about that article, so I have a copy of it sitting in front of me here. You know the premise of the article is that we are obscuring weakness. In fact, the first sentence of the second paragraph says we're putting a shine on a gloomy situation. And I just told you guys we had a fantastic quarter to wrap up a fantastic year. And between Andy and I, we told you we're ahead of our long-term plan on growth. We're right on plan, maybe even ahead on operating margin because we're going to fix this commission program that cost us a couple points last year. And we're well ahead on our subscription conversions. So if you believe that this business model creates long-term value for shareholders, and I think you do, then there's nothing gloomy about it. So I think it's just a case where, unfortunately, the reporter probably doesn't accurately understand what's going on here. She did not talk to us. I think she talked to a few of you, but maybe didn't agree with what you told her, I don't know. But she took a position that because revenue and therefore earnings are going down and EPS is going down, it's a bad situation. I think on the other hand we were clear from day one that that would happen. She says it's hard to compare the new model to the old model, and I think that many of you have told me how much you appreciate all the transparency, the bridges we give you, the fact that we report it out in our – in great detail in our prepared remarks, take you across the bridge. What if the mix was as guided? What if the mix was like last year? Of course, we do that with currency as well. So I don't know, I think it's an unfortunate article written by somebody who didn't spend enough time really understanding the fundamentals of what we're all talking about here. And I know, Andy, you've got sort of a long list. Hopefully, you can just give a few highlights.

Yeah.

And some of the points.

Yeah. So you just heard us talk about our bookings performance, full year bookings grew 18% in constant currency, 14% organically. Clearly, in a software business your license bookings growth is the most important driver there. While reported revenue is down, our mix-adjusted software revenue for the year grew 13%, so it's double-digit constant currency. The operating margins and EPS reported were down, but mix adjusted we're at a 27% operating margin for the year, well on our way to the low-30s. Our OpEx is tightly controlled. You can tell that by looking at the guidance for next year, 1% growth at the midpoint. 1% growth at the high end of our OpEx guidance actually, still only 1% growth. And a couple other things that you guys know that one of the hypotheses in the article was frankly that a subscription model is riskier because we're selling one to three-year terms and breakeven with the perpetual is at four years, completely ignoring our 30-year history with customers of sticky software, our very high maintenance renewal rate, and frankly ignoring just the standard subscription license renewal rate in the industry that's higher than maintenance renewal rates even. And I think probably the only other thing is the author did have a question on, are we really creating value because our deferred revenue on the balance sheet wasn't increasing the way she had expected, ignoring the fact that there's something called unbilled deferred revenue, which we shared with you today and that has grown 31%, $185 million from last year to almost $800 million, $783 million of total deferred revenue, up from under $600 million. So she didn't know that fact but if she'd waited until we reported it, she would have found that out. And the other thing is I want to make sure you guys are clear, that high deferred revenue balance, billed and unbilled, is not due to duration of contracts. It's not like we're selling five-year contracts and putting five years into the unbilled deferred revenue. RPB, which we outlined this on our prepared remarks today, RPB of two actually is equivalent to our weighted average contract length for subscription contracts during fiscal 2016. It ended up being two years on average. So you only have basically one year of subscription in the unbilled deferred. So anyway, none of the facts necessarily support her hypothesis, and I think it's hard to understand a subscription transition. All of you put a lot of time into it and you can't really get there unless you do put the time into it.

Great. No, I really appreciate that. And then just last follow-up question, I didn't quite catch if you said, looking at the Pac Rim, how much of what you're seeing in Pac Rim is just a multiplied perpetual versus what's happening on the macro side?

You mean?

Mix.

The mix? I think it's sales enablement. I think that's the primary thing, so the Pac Rim did improve. It still lags significantly.

Yeah, the bookings number in the Pac Rim was not...

Was fine.

Was a fine number.

Yeah. We had fine bookings. I'm talking the subscription mix.

Yeah.

The subscription mix is at about 30% right now in the Pac Rim. So it did improve by about 600 basis points, but it's moving slowly there and I think it's fundamentally a sales enablement.

Yeah. Let's not call it a problem though because we're actually ahead of plan.

Absolutely.

So the Pac Rim is behind other regions but completed the year ahead of plan, so that's just not a problem. It's just we didn't get as dramatic of over-performance there as we did elsewhere, but that's okay. We didn't expect we would.

Yeah. And by the way, there are a couple of things. I'll give you a couple of other subscription metrics that are interesting. Our large deals in the fourth quarter, so the deals that are over $1 million, over 90% subscription mix in the large deals. While the total channel's at 41%, in the Americas they're at 59% in the channel in the fourth quarter. So the channel's definitely making progress, especially in the Americas.

Yeah, actually, if I could add a little bit of color on that, a couple weeks ago we had our sales kickoff as we frequently do in the first month of the new fiscal year. And this time we invited quite a number of channel partners, so just doing social times and whatnot and I had a chance to talk to many of them one on one. And I always asked them, what do you think about this subscription model. And everyone I talked to said, at the beginning of the year we were pretty skeptical, but wrapping up the year, we love it, because it's allowed us to go after transactions that were just undoable in the perpetual model. A customer has a project; the project is going to run for a year and a half, but they know that they got to use the software for four years to justify a perpetual purchase. But in the subscription, I could subscribe to it for a while and if I don't need it anymore, I'll just terminate the subscription. So that's an example of a transaction we simply would not have gotten. Another example was a small company might have tried to use fewer seats in multiple shifts during a high peak workload. And now they say, no, no, no, let's just subscribe to a few more, and we'll get the project done during the day, which you all prefer as employees and everybody would be happy. So I was actually very surprised, and these were global channel partners, but I was very surprised with the bullishness. They were surprised, actually, by how well this worked for them. So I certainly feel pretty good right now about our ability to drive the channel to high levels of subscription. It's just we didn't focus first on them, we focused first on the direct guys that we have more direct control over.

Thanks, guys.

Yeah. Thank you, Sterling.

Okay, thank you. And our next question is from the line of Matt Hedberg of RBC Capital Markets. Your line is open.

Hi, Matt.

Hey, guys. How are you?

Great. Good.

Good.

So follow up to an earlier question as it pertains to maintenance or legacy license and maintenance contracts switching over to subscription. When you look at fiscal 2017, is there a way to think of the relative size of some of these VPAs or larger deals up for renewal in 2017 versus 2016? I mean, maybe even just generically, are there more, is it less, the same?

Well, we have roughly the same amount of VPAs. It's actually just a little bit more in 2017 than we did in 2016 that are up for it. We did see though, in this year, that some of our customers couldn't make the decision to convert fast enough, so they took a year at a much higher maintenance rate. And so we will go back to them again next year. So we actually have a number of customers from this year that we can go back to and try to convert them again next year. So if you look at that, there was probably a larger pool.

That's great. That's helpful.

By the way, I want to remind you that in our long-term business model, these conversions are not in there.

Correct. No, yeah, no, that's helpful, too. And then in your prepared remarks, you talked about potentially phasing out some license options for, I think, you said, particular products in geos. I'm wondering if you could: A, give us a little bit more color or your thoughts around that. And have you seen enough? Are we closer to a reality where a license option could be eliminated for all products and all geos at some point in the future?

So we're in the midst of the analysis. I think we'll probably internally have a review and a recommendation to look out within the next four to six weeks. We're doing a lot of work on this. It's not a trivial decision. So I think within the next four to six weeks internally, we'll be able to make a decision around it. And frankly, then of course, you have to give appropriate customer notification, which is a lengthy period of time. So I say the underlying premise that we have is that there's an 80/20 rule for everything. And so, that last 20%, if it's a lot of transactions, it's probably costing you a lot to have it. So it makes sense to kind of get over the hump with that. Of course, we'll have to look at all of our products in all of our markets and do something that is proven it makes sense, but we are seeing that it's getting to the point where we'll be making a decision sometime in the coming months, and then we'll let you know about it.

Yeah. And in the meantime, we've been experimenting with a couple of ideas. For example, this Navigate product is only sold on subscription. There's no price book to buy at perpetual and it's selling like hot cakes. So that gets every customers' interest in that product into a frame of mind that, okay, now I'm buying subscription, why not just switch? So, there's some experimentation happening that we're pleased with.

Great. Congrats on the quarter again, guys. Thanks.

Thanks, Matt.

Thanks, Matt.

Thank you. And our next question is from the line of Saket Kalia of Barclays. Your line is open.

Hi, Saket.

Hey, guys. Thanks for taking my questions here. How are you?

Good.

Good.

Hey. So, one question and one follow-up, just maybe first for Andy. So first off, thanks for that normalized kind of 2017 bookings guide. Can you just talk about whether the tech platform business, so IoT, can reaccelerate once we lap some of those tough perpetual comps? And then if we think about sort of the longer-term model, if that business can drive acceleration in total bookings in 2018, which is I think what your original model anticipated.

So we did see a reacceleration in the fourth quarter where there was only one large deal, which actually was the ColdLight deal to one of their customers in a market that we don't play in from pre-acquisition that we closed. But even without that we had high-20s bookings growth in TPG and that was against a deal, that deal was almost $3 million, so just reaccelerations.

And just if I could add, that's now, we're largely round tripped on that because we really did not sell ThingWorx in a perpetual mode. Maybe a few small exceptions in 2017. So you won't find big perpetual deals to comp against when you're looking at – I'm sorry, 2017 versus 2016 because we did not do them in 2016, whereas we did do them in 2015.

Yeah.

And then the second part?

And the second part is the premise I think back in November of last year was that that tech platform business, because it's growing so much faster, can drive an acceleration in total bookings in 2018. So, of course, things have changed around a little bit, but is that sort of how you're still thinking conceptually?

Yeah. So the 2018 model that we laid out for you had the solutions business growing at market rates, 6% basically. And the TPG growing in the 30s. So I think it had 34% CAGR from 2015 through 2021, with it coming down a little bit each year. So we'll update that in November 8, but yeah, we definitely see the high growth as it scales at high growth rates along with the solutions business growing at the market rate, which it grew faster than the market rate in FY 2016. We see that together definitely driving double-digit revenue growth as we exit the subscription transition. So there's no change there. We tried to put through a plan that was pretty balanced, and didn't take us to having to jump over a 20-foot wall to get to it. And...

Well, I mean, in fact...

But we did.

We did that this year.

Yeah.

We actually did that this year.

Yeah.

So you know, we're feeling pretty good about the fact that we should be able to do it a couple years from now because we actually did it this year well ahead of schedule, more or less on that recipe.

Yeah.

Yeah.

And you could look at our bookings guidance for next year. At the high end, it's a 10% bookings guidance growth rate. And we're still being cautious around the solutions business while all the improved execution that we've seen, we believe that flywheel is starting to turn and we're starting to see the outcomes, but we aren't declaring victory yet.

Yeah. Hey, Andy, if I could just elaborate a little bit on that $20 million booking that we had in Q4, that's a deal we had worked on for some time and just didn't know exactly when it was going to close. I actually wished it would have closed in October because if you think about it that one deal represented 5% annualized bookings growth in one deal. And had the deal not happened, we would still have a good Q4. We would still have a pretty good FY 2016, and we'd be looking at 5% to 10% bookings. As it was, it happened in Q4, which takes us down from 5% to 10% down to 0% to 5%. Had it rolled forward three business days, we'd be talking about 10% to 15% bookings. So I mean, we're really – we're in a good place and let's not let one big deal kind of – depending upon where it lands, then sour our perspective of something going forward because we gave you it many times in our discussion. You back that deal out and everything still looks pretty darn good. So that's the perspective we've taken.

Yeah, absolutely. No, totally agreed and I think that's the right way to look at it. Maybe for just a quick follow-up just kind off of Matt's question earlier, so we talked about the possibility of phasing out perpetual, of course, probably with a long tail. But, Jim, the question for you is, can you just talk about how that potential change would affect you competitively with the Dassaults and the Siemens out there still selling perpetual. How do you think going to a subscription only or some form of subscription only in some markets would affect you competitively? Thanks.

Yeah. Thanks, Saket. I mean, I really don't think it would affect us because on one hand our customers in our upfront analysis, majority of them told us they'd rather buy that way. We then have really positive reinforcement because they are buying that way. We have Autodesk out there a couple steps ahead of us already eliminating perpetual. So I think that this is a model where our customers no matter where they turn in terms of their software providers, everybody wants to talk subscription. And I think there's – they can't actually hold out in the area of CAD and PLM because they're knuckling under as it relates to ERP and CRM and marketing automation and this, that and the other thing. So I think they're just sort of agreeing we'll go that way. And I think that's one of the factors we may be underestimated when we thought about what would happen last year. I think we were surprised a little bit by how easy it was to sell subscription because we actually expected more resistance than we ran into. So I don't really think it's going to be a factor and SolidWorks announced they're doing the same thing and so forth. So it's just the way the industry is going now.

And I think at this point we have a lot of data points to show that we're winning with our subscription offer. I mean, we're competing competitively – we're competitive in many of the deals, especially the large deals, and 90% of them were subscription.

Thanks guys.

Okay, great. Thanks, Saket.

Thank you. At this point we're wrapping up the question-and-answer session. I'll be turning the call over back to Tim Fox. Please go ahead. Thank you.

Great. Thanks, Kate, and I'd like to thank everybody for joining us on the call. As Andy stole my thunder a little bit earlier, the one programming note is that we're going to be hosting that webcast on November 11. It will be at 11:00 Eastern Time. November 8, sorry, at 11:00. And look for details over the coming days on the details. We look forward to join us on that call. If not, we'll update you on our Q1 call in January. And with that, I'd like to toss it back to Jim.

Yeah. I just wanted to say thank you to all of you for your support. I mean, we really feel good about the business. I'm looking at Barry here and the way we've changed the strategy and the strategic positioning of the company and the way we've pivoted into IoT and analytics in a way that's very supportive of the core business, it's really just phenomenal. I think about how we're changing the business model and I'm looking at Andy here and the progress we're making on discounting and business model and cost containment, margin expansion, it's really phenomenal. The one problem I had a year ago was execution in the core business and Craig isn't in the room with us here, but, my God, that man has made such a difference in terms of improving our execution. He's like General Patton walking all us here and things get done and they get done well and we've seen the results. So, I'm very pleased with the progress the company's made in the last year. It's really been a phenomenal year. I'm sorry the Wall Street Journal didn't see it that way, but I'm pretty confident that all of you here in the call do, and I certainly appreciate your support. Thank you and have a good evening. Bye-bye.

This does conclude today's conference. Thank you all for participating. You may all disconnect.