Qorvo, Inc. (QRVO) Q1 2025 Earnings Report, Transcript and Summary

Good day and welcome to the Qorvo, Inc. First Quarter 2025 Earning Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Douglas DeLieto, Vice President of Investor Relations. Please go ahead.

Thanks very much. Hello, everyone, and welcome to Qorvo's fiscal 2025 first quarter earnings call. This call will include forward-looking statements that involve risk factors that could cause our actual results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statement contained in the earnings release published today, as well as the risk factors associated with our business in our Annual Report on form 10-K filed with the SEC because these risk factors may affect our operations and financial results. In today's release and on today's call, we provide both GAAP and non-GAAP financial results. We provide this supplemental information to enable investors to perform additional comparisons of operating results and to analyze financial performance without the impact of certain non-cash expenses or other items that may obscure trends in our underlying performance. During our call, our comments and comparisons to income statement items will be based primarily on non-GAAP results. For complete reconciliation of GAAP to non-GAAP financial measures, please refer to our earnings release issued earlier today, available on our Investor Relations website at ir.qorvo.com under Financial Releases. Joining us today are Bob Bruggeworth, President and CEO; Grant Brown, CFO; Dave Fullwood, Senior Vice President of Sales & Marketing and other members of Qorvo's management team. And with that, I'll turn the call over to Bob.

Thanks, Doug, and welcome, everyone, to our call. I want to begin by thanking everyone who attended our Investor Day, both in person and online. We appreciated the opportunity to share with you our strategic positioning and our enthusiasm for the future. The investor slides and a replay of the webcast are available on our IR website under Events and Presentations. Some of the investor feedback we've received is that it would be helpful to discuss our business by end market. We highlighted our end markets in our Investor Day presentation and our formal remarks today will also highlight our opportunities and achievements by end market. Qorvo's six primary end markets are automotive, consumer, defense and aerospace, industrial and enterprise, infrastructure and mobile. They are underpinned by global megatrends, including electrification, connectivity, mobility, sustainability, datafication, and AI. These trends support new applications and new user experiences that are made accessible to end users by customers we serve and the products we enable. Our markets are characterized by multiyear upgrade cycles, including 5G Advanced, Non-Terrestrial Networks, Wi-Fi 6 and Wi-Fi 7, DOCSIS 4.0, Matter, Ultra-Wideband and others. They are also undergoing technology upgrades such as AESA radars, Advanced Power Management, RF MEMS and highly integrated system level solutions, and they are seeing upgrades in the user experience like indoor navigation and force-sensing touch sensors. There are also continuous drivers that are common across markets. These include the continuously increasing requirements for bandwidth, speed and latency, a sharp focus on power efficiency and power management and the need for system level solutions and greater functional density. Customers demand improvements and performance, whether it's in measured, in power out, current consumed, talk time or battery life. They require higher levels of performance with greater efficiency and a reduced form factor to create the differentiation that drives their position in the markets they serve. Qorvo is critical in enabling these capabilities. Now turning to quarterly highlights. In the automotive market, we were selected to supply V2X FEMs for a leading China-based automotive V2X reference chipset platform set to ramp at multiple automotive OEMs in calendar '25. To expand automotive engagements, we are leveraging our Ultra-Wideband portfolio across range of applications, including secure access, digital key, kick sensors, child presence detection and detection of intrusion. We are also expanding our opportunities in EVs to include solid-state circuit breakers. Given the smaller size, enhanced reliability and better thermals of our silicon carbide solutions, we enable solid-state circuit breakers that can disconnect electrical overloads in case of failure to maintain safe and efficient power distribution. For consumer markets, we secured a new engagement to supply a switch mode DC-to-DC charger for a wearable accessory for an Android OEM. We continue to expand our power management portfolio and we are engaged to supply our newest battery management solution for power tools, scooters, e-bikes and other consumer products. We are also supporting a range of applicants with our Matter and Ultra-Wideband technologies, including door locks, smart lighting and indoor navigation. We are combining Matter with Ultra-Wideband to support the emerging Aliro standard for controlling digital access to smart homes and offices. To support global broadband deployments Qorvo's Wi-Fi solutions enable cellular, cable and satellite backhaul applications in developed and emerging markets. Of note, we recently surpassed 75 million Wi-Fi 6 FEMs shift into the India Wi-Fi market. We continue to expand our Wi-Fi portfolio and we are seeing increasing customer interest in our 2, 5 and 6 gigahertz BAW filters for Wi-Fi CPE applications. In other consumer applications, we are expanding our customer engagements with four sensing touch sensors primarily for laptop track pads as well as other consumer applications. Turning to defense and aerospace. We secured design wins across segments, including AESA radars, large defense programs and SATCOM deployments where Qorvo participates in both the low earth orbit satellite and the ground-based consumer terminal. In D&A markets, Qorvo is the beneficiary of underlying drivers, including the trend of one-to-many, the transition of mechanical systems to active electronic scanning systems, increasing system-level functionality and size constraints requiring advanced multi-chip packaging. During the quarter, we fully integrated the Anokiwave team into Qorvo. Our added capabilities in silicon beam-forming ICs and IF to RF conversion are complementary to our transmit and receive RF front ends as well as our power management IC portfolio. We are developing more highly integrated placements that combine our capabilities to bring greater value add to our customers. New product launches during the quarter included three new highly integrated RF multichip modules for X-band, S-band and L-band advanced radar applications. The new modules integrate filters, switches, and amplifiers to simplify design and enable a superior performance, low noise, reduced power consumption and smaller form factor required for phased array and multifunction radar systems. For infrastructure markets, we launched a single-chip inverse cable equalizer that is programmable in the field and electronically simulates signal loss at various cable lengths. For operators, this eliminates the additional parts and tech time required to accommodate short runs during DOCSIS 4.0 field installations. Our single-chip solution also features a switched bypass mode that allows operators to utilize our solution in every line amplifier and field extender regardless of distance. For massive MIMO 5G base stations, we introduced a best-in-class transmit pre-driver. It is engineered specifically for 32-node massive MIMO systems and is scalable up to 64-nodes. For industrial and enterprise markets, we are seeing continued demand for new orders for AC-to-DC high-density server power supplies. During the quarter, we began sampling the industry's first 4 milliohms silicon carbide JFET. Its RDS(ON) performance of 4 milliohms is best-in-class on resistance among 650 to 750 volt power devices. This is especially important for applications such as circuit protection that are migrating from traditional switch mode static switches that are on for longer durations. This is a significant milestone for solid-state circuit breakers and it highlights the trend we are seeing from mechanical to semiconductor-based electrical systems for residential, commercial and industrial applications. For Wi-Fi enterprise access points, we are engaged to supply Ultra-Wideband to enable indoor navigation in office buildings, shopping malls and factories. By adding Ultra-Wideband to Wi-Fi access points, the access points become the anchor or reference point, enabling precision navigation for Ultra-Wideband enabled devices. As an added benefit, Ultra-Wideband can reduce costs by identifying the optimal location for access point placement during Wi-Fi installation. Lastly, we're leveraging our force-sensing touch sensor technology in new industrial markets, including handheld medical devices that measure oxygen levels. Turning to mobile, which is primarily smartphones and tablets, our largest opportunity remains at our largest customer. We are investing in multiple multiyear programs to increase our content and continue to grow revenue with this customer. Our R&D investments for future programs include products we currently supply to this customer as well as new products we are not currently supplying. Within the Android ecosystem, Qorvo remains the primary RF supplier. We collaborate with Android OEMs on their product road maps over multiple years and we are positioned to drive growth as 4G devices move to 5G and enter our SAM. In calendar '24, we expect Android 5G unit volumes to grow greater than 10%. We are also positioned to grow with 5G Advanced, which occurs with new releases of the 5G standard. Content drivers in 5G events include an additional transmit path, nonterrestrial network connectivity and requirements for Power Class 2 amplifiers to increase output power improve data throughput and extend cell site coverage. During the quarter, we ramped multiple new products, leveraging our newest BAW and LRT SAW processes. For an Android OEM, we commenced shipments of the most functionally dense mid-high band pad on the market. This new MHB pad integrates the diversity receive content that was historically offered in a separate SAW-based module. It is a highly complex multi-chip module that features Qorvo's internal BAW, LRT SAW and GaAs HBT as well as CMOS and Silicon on Insulator that we source from our foundry network. It improves efficiency and reduces power consumption while shrinking board space requirements by approximately 35%. Within mass-market smartphones, we secured multiple design wins with our recently launched portfolio of low, mid, high band pad. Each LMH pad integrates the low, mid and high band main path content that previously required two placements. This saves approximately 40% in board space, simplifies design and helps customers accelerate their time to market. In mobile Wi-Fi, MediaTek selected Qorvo as the exclusive supplier of Wi-Fi 7 FEMs for customers of their DX4 Wi-Fi chipset. MediaTek's DX4 chipset and Qorvo's Wi-Fi 7 FEMs are optimized to deliver superior performance for flagship and mass-market smartphones. We also expanded our Ultra-Wideband wins in the Android ecosystem to include an additional handset customer. Motorola's Moto X50 Ultra, which launched in the June quarter, features Qorvo's Ultra-Wideband SoC. This is our first win in a mid-tier smartphone and is an early indicator of Ultra-Widebands proliferating across mass-market smartphone portfolios. At a high level, the Qorvo team continues to deliver operational excellence. We are investing in core strengths to differentiate our products while executing on cost initiatives and productivity improvements to reduce our capital intensity to structurally enhance our gross margin. As we committed to, during our Investor Day in June, we are migrating to larger wafer diameters. During the June quarter, we successfully completed our migration to 8-inch BAW and our BAW lines are now exclusively 8-inch. We're also committed to a model of long-term growth in each operating segment with R&D investments focused on large opportunities. In ACG, our investments are focused on growing and our largest customer. In HPA, our investments are focused on defense and aerospace, along with power management. In CSG, our investments are focused on automotive connectivity, advanced Wi-Fi RF solutions and Matter and Ultra-Wideband SoCs. Qorvo's technologies are critical in solving our customers' most complex RF and power challenges related to efficiency, performance, and size and we are confident in our long-term growth and diversification. And with that I'll turn the call over to Grant.

Thanks, Bob, and good afternoon, everyone. Revenue for the quarter was $887 million, representing a decrease of 6% sequentially and an increase of approximately 36% year-over-year. Non-GAAP gross margin of 40.9% in the June quarter came in at the high end of our guidance range of 40% to 41%, benefiting from product mix on higher revenue. Non-GAAP operating expenses in the quarter were $265 million, which included $4 million of spend associated with our digital transformation. As we progress through this multiyear effort, the spend will be included in the other operating expense line on our non-GAAP P&L and we will provide expense guidance related to this initiative on a quarterly basis. Non-GAAP diluted EPS was $0.87, which was also above the high end of our guidance range due to higher revenue and gross margin, offset by slightly higher operating expense. On the balance sheet, as of quarter-end, we had $1.1 billion of cash and equivalents and approximately $1.5 billion of long-term debt outstanding. During the quarter, we retired $27 million of our 2024 notes and have approximately $412 million remaining. These notes are classified as current and will mature in mid-December. Subject to changes in the interest rate environment and other factors, we currently expect to retire these short-term notes later this year. We ended the quarter with a net inventory balance of $727 million representing a sequential increase of $16 million, composed primarily of WIP and raw material as we support the seasonal ramp at our largest customer. Turning to the cash flow statement. In fiscal Q1, we generated operating cash flow of $81 million and capital expenditures of $38 million, leading to free cash flow of $43 million. As a reminder, our CapEx spend will vary quarter-to-quarter and reflects the timing of cash disbursements for capital purchase. Consequently, CapEx as a percentage of sales in any given quarter may be above or below our annual target of approximately 5% of sales. We repurchased $125 million of stock at $101 per share in the quarter. The rate and pace of our share repurchase considers several key factors including our long-term financial outlook, free cash flow, debt maturities, alternative uses of cash and other relevant strategic considerations. This approach ensures that our capital allocation strategy balances future growth with return of capital and aligns our underlying goal of delivering long-term shareholder value. Turning to our current quarter outlook. We expect revenue of approximately $1.025 billion plus or minus $25 million. Non-GAAP gross margin between 46% and 47% and non-GAAP diluted EPS between $1.75 and $1.95. As communicated at our Investor Day in June, gross margin is expected to improve as we execute on key objectives. Progress will be driven by business and product mix, internal factory utilization and productivity initiatives, volume of production outsourced to external partners and other factors. Throughout the fiscal year, gross margin will vary on a quarterly basis due to these factors. Given anticipated product mix and production schedules, we currently believe fiscal Q1 will mark the low point of gross margin in fiscal '25. We project non-GAAP operating expenses in the September quarter will be approximately $275 million, with variability related to the timing of product development spend and other factors. The sequential increase is comprised primarily of other operating expense driven by our digital transformation, which is expected to be approximately $10 million this quarter. During fiscal '25, we continue to expect approximately $40 million of expense related to this project with quarterly variability related to the achievement of progress-based milestones. Below the operating income line, our non-GAAP expense is expected to be between $8 million to $10 million, reflecting interest paid on our fixed rate debt offset by interest income earned on our cash balances, FX gains or losses, along with other items. Presuming we retire our 2024 notes in mid-December, we expect non-operating expense to increase in the March quarter by $3 million to $4 million over the current run rate. This is due to the differential in the interest rate we pay on the 1.75% 2024 notes versus the interest rate that we currently earn on our cash balances of approximately 5%. Our non-GAAP tax rate for fiscal '25 is expected to be within a range of 10% to 12%. We project this will increase over time due to changes in tax legislation such as the global minimum tax and other factors. Looking at operations, the Qorvo team continues to execute exceptionally well. As Bob mentioned, we completed the transition of our BAW lines to exclusively 8-inch and we are seamlessly running product through the Beijing and Dezhou facilities now owned by Luxshare. We are leveraging internal factories and advanced packaging facilities that are critical differentiators for each of our operating segments, while outsourcing to our robust foundry and OSAT partners where we benefit from their scale and R&D investments. Our three operating segments serve a broad set of markets that are underpinned by multiyear growth drivers. We are critical to solving our customers' most complex challenges related to RF and Power and we are confident in our ability to deliver long-term revenue growth, increasing diversification and improved profitability. At this time, please open the line for questions. Thank you.

We will now begin the question and answer session. [Operator Instructions] Our first question comes from Quinn Bolton with Needham & Company. Please go ahead.

Hey, guys. Congratulations on the nice results and outlook. I just wanted to start with kind of a big picture question. Your largest customer, I think, got the market pretty excited about the possibility of AI smartphones. I'm just wondering if you've started to see any impact, any increase in demand driven by the AI smartphone trend, whether it's your largest customer or within the Android channel? And then I've got a follow-up for Grant.

Hey, Quinn. Thanks again for your comments. And as far as AI goes, I think, we're taking more of a conservative approach. I mean, clearly, we saw that in what Samsung released in the S24. And just to remind the group, we've got excellent dollar content in that and they had a pretty nice ramp. It wasn't tremendous above what expectations were, but they did a good job this year with the S24. Whether it was due to AI or not clearly sure. And as far as our largest customer goes, since they haven't released their next-generation phones, we're not going to comment. But I think as an industry, it would be wonderful if that AI came out, it was very useful for users and reduce the replacement cycle time so that we would see an uplift. That would be fantastic. But that's not what we're modeling at this time.

Got it. Thank you. And then for Grant, just wondering if you could give us an update on your thoughts sort of as you move into the back half of the calendar year, thoughts on utilization rates? And any update on the flush of the high-cost Android inventory? Is that now mostly out of the model as we move into the September quarter. Thank you.

Thanks, Quinn. In the September guide, we expect a substantial sequential increase in gross margin and that's primarily related to mix the September quarter and to a lesser degree, December quarter will benefit from higher mix of customized solutions for flagship tier phones. That product mix generally includes a higher amount of externally sourced silicon and SOI content. It's not impacted by internal utilization levels. So that's one dynamic that's occurring. And that compares to our prior two quarters where revenue was comprised of a larger mix of high-cost standard products that were burdened by prior periods of underutilization. In the quarter just concluded, we saw approximately 200 basis points of headwind associated with underutilization. And in the quarter, the September quarter, we should see it falling to around or slightly less than 100 basis points and then negligible for the back half of the year.

Perfect. Thank you.

The next question comes from Tim Arcuri with UBS. Please go ahead.

Hi. This is Aman on for Tim. I just wanted to get some feel for your China mobile market. Sell-through data has been getting a little bit better recently. But trying to get a sense for what you might be seeing there and how that might be progressing as we move forward throughout the calendar year?

Hi, Aman. This is Dave. Yes, I think, it's -- we're seeing the same data you're seeing, it's a little bit better year-over-year. I mean, right now, based on the numbers we're tracking, we expect it to be up low single-digit percent kind of similar to the overall smartphone market and how we're calling that. So the 6/18 holiday was a little better year-over-year. But overall if you look at the cumulative smartphone sales to date, it's pretty flat to up slightly from what we see.

Thank you.

And the next question comes from Christopher Rolland with Susquehanna. Please go ahead.

Hey, guys. Thanks for the question. I guess, maybe getting back to the September quarter. Just a question I keep getting asked from investors is around revenue still being down year-over-year. And I think the assumption is you have content growth at your largest customer. So and perhaps we have an AI refresh cycle. I know you're conservative there. I appreciate that conservatism. But still why not growth or at least flat year-over-year particularly in mobile? Thank you.

Thanks for the question, Chris. At least in terms of the September guide year-over-year, the slight decline is principally related to smartphone revenues. We've talked in the past about significant gains at our largest customers and maybe Dave can follow up for me and comment there. But those assumptions in the guide contemplate total smartphone market. SKUs, unit volumes, timing, mix and all of that may prove conservative or vice versa, but we'll have to see how things play out. But overall we feel very, very, very comfortable with our assumptions. Dave, I don't know if you want to add on that concept.

Sure. And you guys know we've talked about some of these more key models that ramped in the first half and our content there. So the S24, we had over $5 a content, and we're on the other side of that ramp now. The pixel we had about $15 a content. So we're also on the other side of that ramp as well. So we had some strong ramps in the first half that we're now on the other side of. And then Bob mentioned our low, mid-high and some design wins we have there. We actually have purchase orders on the books now and that will just start to ramp at the very end of this quarter. So that will ramp up as we go through the balance of this year and into next year. So we're -- it's kind of a timing situation happening there in the Android ecosystem. And so that's probably a little bit of a pocket there that you're seeing in September.

That's very helpful. Thank you. Just a quick follow-up. Bob, sometimes you give us some new products to look out for like that low, mid, high. You've talked about that before. Is there something else on the horizon some new cool products that might be needle moving for you that we should be on the lookout for?

Yes, the low, mid, high is actually an interesting one because we're actually tiering it for the different product segments in the Android ecosystem. So for the mass tier and typically in the entry area, we're coming out with a lower cost that's not, excuse me, a lower cost LMH that we're starting to release to the market. So we're actually expecting that to begin to ramp all of our low, mid, high starting a little bit this quarter, bigger obviously in December and then carrying on in a much bigger way in the March quarter. So I think that's a little bit different. A lot of times people think when we talk little bit high, it's all the same product. It's not we're tiering it for the different various entry tier, mass tier to the high tier. So I think that's pretty exciting. And of course, we're working on some others and don't necessarily need to telegraph those at this time. But also that mid, high band pad, where we integrated in the diversity receive functions is doing extremely well and we saw a really great ramp at one of our larger Android customers there as well.

Yes, I would just add to that, Bob. I mean I appreciate the question, but these products just ramped. And our customers and ourselves, we like to get some scale off these products. So they generally run for a couple of years. And so the product Bob has mentioned, we'll have that same content next year. So the $15 or so of content we had this past year, we'll get that again next year. And the low, mid, high, our customers are really excited about that. Very strong engagements across all of our customers in China. And they plan to use that for several generations across their product portfolio. So we're certainly in those discussions for the longer term with all of our customers. We engage in this roadmap discussion several years out. But nothing to report yet, give us a little time to get some volume under our belt on these current products.

Nothing in [indiscernible] but plenty for other markets.

Oh, plenty for other markets, yes.

Awesome. Thank you, guys. Cool new products. Appreciate it.

Thank you.

[Operator Instructions] Our next question comes from Karl Ackerman with BNP Paribas. Please go ahead.

Yes, thank you. You spoke about the transition to 8-inch BAW wafers for internal manufacturing, which is great. But you've also discussed today and in the past that you have worked with third-party foundries for external silicon. I guess how do you think about the optimal trade-off between internal production versus using external foundries over time that might help support margin expansion. Thanks.

Sure. So thanks for the question, Karl. Generally, it's technology dependent. So things like silicon or SOI we have not done in-house and wouldn't consider doing in-house more efficiently than our partners can. Other areas where we can differentiate ourselves especially like BAW where there's not a foundry network available. We'll continue to produce those products that contain that internally as it differentiates us. And then from an OSAT perspective, in terms of assembly and test and other services, we can go out to a large partner network and benefit from their scale and their continued R&D investments.

Yeah, maybe one caveat to that Grant is like in the defense market, we see that assembly capability has something that differentiates us. So that's something that we do internally.

Got it. Maybe one more, if I may. Just how to think about content growth, just more broadly I guess you spoke about at your Analyst Day how 5G enhanced will create more placements for antenna tuning and perhaps another placement for Ultra-Highband pad. Could you talk I suppose, generally, in terms of how to think about the adoption for 5G and premium to your handsets over the next year or two? Thank you.

Sure. Yes, and I think for those of you that were at the Investor Day, I think, Frank did a good job of laying out all the opportunities that we see coming in 5G Advanced and unlicensed spectrum, in foldable phones and different form factors that are driving lots of challenges for our customers. And so that's all coming. I mean, those trends, those discussions are ongoing with all of our customers in terms of the new products that we're developing and how they plan to integrate those into their phones. And then you've got trends like AI, right? That's going to drive higher data rates, lower latency. And that's all going to hopefully accelerate those trends that we talked about for 5G Advanced and some of those other features and increased power levels. And so as Bob mentioned earlier, it's still in very early innings for AI. But as that accelerates, it should drive the RF content faster and it will just accelerate the adoption of 5G Advanced.

Thank you.

And the final question comes from Edward Snyder with Charter Equity Research. Please go ahead.

Thanks for taking the question. This is Jack Egan on for Ed Snyder. So you've mentioned your content should grow pretty strongly in the second half of this calendar year. And I know you haven't guided to it, but I was hoping you could just give us kind of a general ballpark idea of your expected content growth or at least how it compares to prior years? And then I just had a quick follow-up.

Sorry, Jack, when you said content, I don't know what market you're talking about, customers, which one of our business units, I need a little more color to help answer your question.

Sure. Sorry about that. I was talking about mobile content at your large customer.

Okay. What I can say is what I've said probably the last couple of quarters is I'm confident in our ability to grow at our largest customer, gain share this year as well as I think we're in a great position to be able to gain share again next year at our largest customer.

Got it. Okay. And then so I guess on the non-mobile side, we've seen quite a few reports in the analog space so far, call out some particular strengths in China in the second quarter. And of course, it's a very different market from cellular, but so far that demand has -- it seems pretty broad-based and strength. And so have you seen the same rebound in China maybe in the HPA or CSG or in the cellular business as well? And were there any areas of specific strength to call out?

Yes. I wouldn't necessarily maybe focus on China specifically. I mean when we look at the markets that we serve, it's pretty broad-based across HPA and CSG. I mean if you look in China for automotive, for example, I mean, definitely, the Ultra-Wideband adoption that we have been seeing is starting to pick up there and accelerate for things like presence detection and kick sensors and other advanced radar features. On the power side, certainly, when it comes to AI and data center, we're seeing increasing requirements for improved efficiency in the power supply. So that's driving the adoption of silicon carbide. So that's been a great trend for us. Another new area of growth for us, both inside the car and outside the car, as Bob mentioned, is circuit protection. And so that's a really interesting opportunity for us because circuit protection today is pretty much exclusively done with electromechanical solutions. And so that's all new SAM entering into our markets that will be a solid-state and silicon carbide is the leading technology for that, especially the silicon carbide that we have to offer that. So there's a lot of there's great new growth trends. And those things have just accelerated really since we talked about on our Investor Day.

The thing I'd like to add to that, Dave, is the V2X that I talked about in my prepared remarks, in China is actually China's leading all the regions as far as adopting V2X. And that's pretty exciting for us. Again, that's going to be ramping next calendar year. But it's good to see that there and then we'll expect it obviously to flow into Europe and then obviously into US.

Got it. Thanks. That's helpful.

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

We want to thank everyone for joining us on tonight's call. We appreciate your interest. We look forward to speaking with many of you at upcoming investor events. Thanks again. Have a great evening.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.