Welcome to the SolarEdge conference call for the third quarter ended September 30, 2021. This call is being webcast live on the company's website at www.solaredge.com in the Investors section on the Event Calendar page. This call is the sole property and copyright of SolarEdge with all rights reserved, and any recording, reproduction or transmission of this call without the expressed written consent of SolarEdge is prohibited. You may listen to a webcast replay of this call by visiting the Event calendar page on the SolarEdge investor website. I would now like to turn the call over to Erica Mannion at Sapphire Investor Relations, Investor Relations for SolarEdge. Ma'am, please begin.

Good afternoon. Thank you for joining us to discuss SolarEdge's operating results for the third quarter ended September 30, 2021, as well as the company's outlook for the fourth quarter of 2021. With me today is Zvi Lando, Chief Executive Officer; and Ronen Faier, Chief Financial Officer. Zvi will begin with a brief review of the results for the third quarter ended September 30, 2021. Ronen will review the financial results for the third quarter, followed by the company's outlook for the fourth quarter of 2021. We will then open the call for questions. Please note, the call will include forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from management's current expectations. We encourage you to review the safe harbor statements contained in our press release and the slides published today for a more complete description. All material contained in the webcast is the sole property and copyright of SolarEdge Technologies with all rights reserved. Please note, this presentation describes certain non-GAAP measures, including non-GAAP net income and non-GAAP net diluted earnings per share, which are not measures prepared in accordance with U.S. GAAP. The non-GAAP measures are presented in this presentation as we believe they provide investors with the means of evaluating and understanding how the company's management evaluates the company's operating performance. These non-GAAP measures should not be considered in isolation from, as substitutes for or superior to financial measures prepared in accordance with U.S. GAAP. Listeners who do not have a copy of the quarter ended September 30, 2021, press release or the supplemental materials, may obtain a copy by visiting the Investors section of the company's website. Now I will turn the call over to Zvi.

Thank you, Erica. Good afternoon, and thank you all for joining us on our conference call. We are happy to be announcing a record revenue quarter of $526 million. We are seeing growing demand for our existing products across all segments and regions and strong interest in our pipeline of new products. In fact, we have already secured orders for delivery in Q4 and in Q1 of more than 4 gigawatts of AC nameplate inverters compared to 1.9 gigawatts that we shipped in this quarter, and we are still receiving additional orders for this period. In today's call, I will address the temporary headwinds that we are facing on the operational side, which will clarify our next quarter guidance which does not fully reflect the high demand for our products and our anticipated continued growth. In the last earnings release, we updated that production in our factory in Vietnam have been partially suspended due to a government-enforced, COVID-related lockdown. We explained that assuming the interruption would be short as we were expecting at the time, we would compensate for it by increasing capacity in our other factories, and this is indeed what we did. However, the shutdown ended up being longer and more extensive than expected, practically putting to a halt our manufacturing capacity in Vietnam for 12 weeks. Prior to this event, the Vietnam factory was providing between 20% and 25% of our capacity and the vast majority of our nontariff shipments to the U.S. market. So while we increased capacity in the other sites to partially compensate for it, this shutdown created a gap in supply of products for the fourth quarter that will take some time to replenish and which will come at a higher cost due to the need for expedited shipments and due to tariffs…

Thank you, Zvi, and good afternoon, everyone. This financial review includes a GAAP and non-GAAP discussion. Full reconciliation of the pro forma to GAAP results discussed on this call is available on our website and in the press release issued today. Segment profit is comprised of gross profit of the segment less operating expenses that do not include amortization, stock-based compensation, expenses and certain other items. Total revenues for the third quarter were a record $526.4 million, a 10% increase compared to $480.1 million last quarter and a 56% increase compared to $338.1 million for the same quarter last year. Revenues from the solar segment were a record $476.8 million, an 11% increase compared to $431.4 million last quarter and a 53% increase compared to $312.5 million for the same quarter last year. Overall, this quarter, we shipped approximately 4.7 million power optimizers and approximately 231,000 inverters. U.S. solar revenues this quarter were $188.6 million and represented 39.5% of our solar revenues. Solar revenues from Europe were a record $234.5 million or 49.2% of our solar revenues. The revenues in Europe were driven by record results in Germany and Italy, which grew over 50% quarter-over-quarter as well as record revenues in Poland and France. Rest of the world solar revenues were $53.7 million or 11.3% of our total solar revenues. The revenues in rest of the world were led by sales in Australia, Japan and Israel and record quarter in Taiwan and Thailand. On a megawatt basis, we shipped 592 megawatts to the United States, 1,029 megawatts to Europe and 282 megawatts to the rest of the world. 39% of this amount was commercial products and the remaining 61% were residential. ASP per watt, excluding battery revenues this quarter, was $0.255, a 5.2% decrease from $0.269 last quarter, resulting from…

[Operator Instructions]. Our first question will come from Brian Lee with Goldman Sachs & Co.

The first one I had was just around the backlog. I appreciate you providing that additional metric in context. Can you - Ronen and Zvi, can you give us some context in terms of how much the backlog at 4 gigawatts is up versus a quarter ago? And then in terms of sort of lead times you're quoting on that backlog mix, just to get a sense of how far that stretches out. And it sounds to me like you're saying that because of the backlog and because of the supply chain and manufacturing issues, Q1 should be seasonally much better, maybe better than the modest growth we're seeing here just for Q4, but can you kind of maybe encompass all of that in the context of your backlog, the trends you're seeing and how it impacts into Q1? And then I had a follow-up.

Yes, Brian. So starting from the backlog, as we mentioned, we're today with backlog - or orders for shipment in Q4 and Q1 combined of more than 4 gigawatts. And in the third quarter, which was a record quarter, we shipped 1.9 gigawatts of inverters. And we're using here inverters as the reference point. It's not a matter of - it doesn't include batteries and it's not including the optimizers, it's just the way to compare. So the record Q3 was 1.9. And today, we are with backlog for deliveries in the next 2 quarters of more than 4 gigawatts. To the second part of the question, so indeed, the - or let me touch on lead times, and I mentioned this as well. So as you know, we have a very wide variety of products and offering and the lead times vary by product. We are still taking - we're taking few orders for delivery in Q4, unless it's some specific products where we have access and availability and - but we are still taking orders in Q1. So for most of the products, the lead times are in the range of 12 to 14 weeks. On some commercial products, it's a bit longer than that. And on the batteries, it's a bit longer than that as well. So it's anything that ranges from call it, 12 weeks to 16, 18 weeks on batteries. And the outlook for Q1 is obviously complex, and there are many, many moving parts and unknowns. But generally speaking, with our plans for recovering production capacity in Vietnam as well as from the other factories, we do expect to see growth, in particular, on the top line. From a margin perspective, Q1 will still be challenging in getting that equipment quickly and on time to the customers when and where they need it. So we expect still some margin headwinds in Q1.

All right. That's super helpful. Maybe just a second question on that margin topic. So you did the 36-and-change gross margin in solar products this quarter. You've got the 31% to 34% view for Q4, a couple of moving pieces there. But can you sort of bridge the gap a little bit in terms of the tariff versus nontariff mix, the shipping issues and sort of - Ronen, I think, mentioned it was temporary. Like how temporary are some of those factors as you start to kind of get back to a more normal margin moving through 2022? Maybe if you could break down some of the pieces and maybe the potential time frames for when they come back to a more normal state.

Sure, Brian. So first of all, in order to explain this, let's understand the mechanism that is actually creating the margin headwinds. In general, when your manufacturing capacity disappears by about 20% to 25%, as Zvi mentioned in the call, the first thing that we did was actually to divert a lot of our manufacturing to China. And this is something that creates, first, 2 issues. The first one is that you need to start now rotating some of the components that were shipped to Vietnam into China in order to make sure that you have the right components at the right place. And of course, we remember that this is all happening while there are component challenges worldwide. And therefore, this by itself creates expenses related to simply mobilizing quickly large amount of components from one site to the other, usually on expedited shipment. The second part of this diversion, I would call, is the fact that while you're expediting some of the shipments, the cost of these expedited shipments also increased dramatically over the last few months as we know from what we see all over the world. And therefore, you get like a double effect that even to be able to compensate for the manufacturing in cell itself, you need to pay much more to bring components in. Now we go into the manufacturing. And the idea is that in a normal way of operation, you would usually use your capacity to ship as much as you can using ocean freight to accumulate products close to your customers in our warehouses in Europe and the United States and then ship them locally, all using regular ocean freight and in some cases, of course, ground transportation. Once this capacity is gone, you basically live from the head to…

Our next question comes from Mark Strouse with JPMorgan Securities.

I wanted to go back to the new facility in Mexico. What percentage of your U.S. shipments will come from Mexico versus Vietnam? You kind of steady state once Vietnam is back up and running? And then can you kind of compare and contrast both the manufacturing cost between Mexico and Vietnam as well as the shipping costs into the U.S.?

So I might need you to repeat the second part. Regarding the first part, so the idea is to reach a point once we're fully ramped where almost all of the products that are intended for the U.S. market are coming from Mexico, and that's how we're designing the capacity. At the same time, having the flexibility that we have non-China manufacturing in multiple locations, not only Vietnam, also Israel and Hungary, will allow us to deal with fluctuations in the demand in case we cannot supply everything from Mexico. But ideally, we would want to deliver from Mexico all of the volume required by - intended for the U.S.

Okay. The second part - yes, this - yes, go ahead, Ronen.

So for the second part, I think that it's relatively early to understand exactly the cost compared to Vietnam because, again, the situation is - today that all shipment costs are very high. So compared to where we are today, Mexico is going to be dramatically cheaper than Vietnam. I think that once we're starting to manufacture in Mexico, and at the same time, ocean freight is going back to normal, I would assume that the difference is, of course, better in manufacturing in Mexico but not as dramatic. But I think that there's another thing that needs to be taken into account, and this is also related to inventory levels and the capital - uses of capital because the line today from Vietnam to the United States is approximately 6 weeks where products are on a ship before they are being distributed. And once you're manufacturing in Mexico, we're talking about 1 week to 10 days at most. And that means that we can also make our inventory management more efficient. So - and of course, this is something that also save costs. So I think it's going to be cheaper. It's a little bit hard to evaluate it right now.

Okay. That's helpful. And then just my follow-up, can you just go back to the decision to not increase pricing this year? I mean you've increased prices in the past. I'm thinking back to when the Chinese tariffs originally came on a few years ago, why not do it now? Do you see this as an opportunity to gain market share perhaps? Or any other color would be helpful.

I think that the main thing is we're not looking at this as a short-term event. So there's - it's a complex situation for everybody. Our customers gave us orders early and budgeted their activity and installations, in particular, commercial projects with certain assumptions. And we feel, as we did throughout the constraints of the last year, that our ability to get them their product when they need it and according to our commitments is very important to our long-term relationship with them, and we see where - we see the fruits of that already today. So we don't want to react with anything drastic quickly that will impact the business of our customers. But again, not so much because we think it's going to have an immediate impact on market share one way or another. But it's part of our long-term relationship with our customers.

Our next question comes from Stephen Byrd with Morgan Stanley.

I wanted to discuss storage. You gave a discussion of the ramp-up and moving next year into about 180-megawatt hours per quarter. I wanted to just get your latest thinking in terms of the outlook there for both sort of as you think about the sales and margin potential on storage. It's obviously becoming a bigger part of your business. And we're just interested in your latest thinking about the outlook for that going into 2022.

So in general, as we mentioned before - first of all, indeed, batteries are going to be a bigger part of our revenues. And we believe that over time, it's going to be around 25% gross margins that we will see on this product because we believe that some of the prices today reflect the fact that the demand is exceeding the supply dramatically. And once volume will come back, this will be reduced in a sense. There may be an opportunity for larger margins or higher margins in the first few quarters, but we do expect that they will go down a little bit. And of course, the first battery is based on our Samsung cells, and once we're moving to our Sella 2 cells coming by the end of next year, then, of course, we have another chance of expanding them. But in any case, I would say that they would range between 25% to 30%, they will not exceed this number dramatically. And I missed the second part of the question.

No, that's really - that's the - you answered that question. That's exactly what I was focused on. And my follow-up really is broader, which is as we think about 2022 and even beyond '22, component sourcing challenges. You've given discussions quite a bit over time on this. But just stepping way back, what is your sense for the timing for resolution of some of the shortages sort of for easing some of these issues around component sourcing challenges. What's your sense of the time frame over which we're looking at kind of a normalization?

That's an excellent question. And when you know, please let us know as well. I'd say this, first of all, the situation has not yet - has not improved yet. So we are managing through this complex environment, and there's a lot of juggling going on, and R&D resources that are working on qualifying alternative sources in order to make sure that we are never short on what we really need in order to deliver. And it's especially challenging when you're growing, and you're growing in two accesses. You're also growing in the volume of the existing products and also trying to release high volumes of new products because the kind of practice in the components business is that they allocate for you something that you received the prior year, maybe with a slight increase, and they expect you to be happy with that. And - but if your business is actually growing dramatically as it is in our case, it becomes more complex. So the situation is challenging. But again, we're managing through it. In terms of a sense as to when there is a dramatic improvement, I don't know that we have information that someone else doesn't have. So there are a couple of our suppliers that we really depend on, that we do have some visibility in terms of new capacity that they are bringing online and when that will happen and how we secure access for ourselves into that capacity, but that helps us on some very specific critical items, but the challenge is much, much broader than that. And again, I don't think that we have a better understanding than what is generally reported in the news about this topic.

Our next question comes from Maheep Mandloi with Credit Suisse.

One thing which kind of caught my eye was the inverter product you talked about in Japan, which works when the grid is not available. Could you just talk more about it? And is that something which you expect to launch in the U.S. as well?

Yes. So the practice that in recent - in the last year has become a regulatory mandate in Japan to have with every installation or with every inverter, a - what they call a utility outlet or a small AC socket that you can pull power from if there's an outage without - in the local storage. So we developed that technology for the sake of the Japanese market. The Japanese residential market is a very interesting market, and it's - and on one hand, you have to be patient when trying to take market share in Japan. And at the same time, some of the benefit that our system provides like enhanced safety monitoring capability, the ability to fit a complex roost, all of those are very relevant for the Japanese residential market. So we're optimistic about the potential within this residential market, and that's why we developed the technology, and we are productizing it for Japan. It could be productized for other markets, but I think if you look at the global market, there are 2 overriding trends that are impacting the topic of storage. It's the increase of electrification, of - in the homes. So whether it's through shifting to EV or electrifying HVAC, the capacity and power requirements of the home are increasing. And at the same time, grid instability is causing the need and drive towards resilience. So the real solution for what the North American market or European market in terms of resilience, is what we are seeing. People are going to more batteries, larger batteries, larger inverters and larger systems and more attach rates of batteries. That's what we are aiming our offerings in those markets and are optimizing for that capability. That said, we could productize this technology that we have for other markets as well. We'll kind of look and see if that is justified.

And hopefully, we can see more of that at the Analyst Day. And just a small kind of housekeeping of follow-up as - in the cash flow's line item, I see around $19 million of investment in a private company. Just wanted to understand, is that anything specific you want to disclose?

So it's basically - we made early this year an investment - a minority investment into a company called to AutoGrid and that's what's reflected there.

Our next question comes from Phil Shen with ROTH Capital Partners.

It looks like you're making progress with the battery launch. Our check suggest customers like the stackability and other - a number of other features of the product. You shipped 20-megawatt hours in Q3, expect 70-megawatt hours in Q4 and expect to ramp up to the 180-megawatt hour production run rate by end of Q1. How many megawatt hours were recognized in revenue in Q3? And how many megawatt hours do you expect to recognize in revenue for Q4?

So in general, we provide shipment and we do not go into the revenue recognition. I can tell you that the amount was not extremely large of this amount and - but we do not break this number.

Okay. And then as it relates to market share in 2022 in the U.S., I'm picking up that there are a number of customers that are wanting to increase their mix to you guys. I was wondering if you could talk through how you see the U.S. resi market share dynamics as we get through and go into the year.

Yes, yes, Phil, I think we'll repeat the answer that we usually repeat in that regard. The - assessing market share in the U.S. residential market is tough. There are indicators, internal and external and third-party that kind of show a small swing in one direction. There's an equal number of indicators by other signs that show a swing in another direction. So looking at all of the data that we see in front of us, I don't think there is a major shift in one direction or another. I would say that if you look at something that I think is relatively clear is the growth of the share of the top 10 installers in size of the overall market, and we are typically associated to be stronger with the larger installation companies. So that's a positive indicator from our perspective. But again, it's just one of a bunch of data points and indicators that I'm not sure a firm conclusion could be drawn from.

Our next question comes from Colin Rusch with Oppenheimer & Co.

Can you just give us an update on the ramp at Kokam and how we should be thinking about that supplementing some of this nonsolar business?

So in general, again, I think that we need to look at ramp in Kokam before Sella 1 - Sella 2 and after. Right now, our factory is 120- to 150-megawatt hour, it's fully booked. And we're - basically, whatever we can manufacture, we're shipping there. And I think that in some of the cases, we're simply able to - around the projects that we do in Australia to sell a little bit more pack business than cell business, which is providing higher revenues from this limited capacity, and this is the record revenues that you see this quarter and last quarter. Once we will go into Sella 2, then, of course, the 2-gigawatt hour capacity that we have and - can be expanded is something that will allow Kokam to grow much further. And in the nonsolar storage business that we see in front of us, either as providing batteries for UPS, for special vehicles, high-power applications and ESS like spinning reserves, I think that there are a lot of opportunities there. But all of those will be, I believe, mostly generated once you'll have Sella 2. And even within this, we need to start producing cells from this product - this factory, send them to customers to be qualified, and then you'll see an accelerated growth coming after, I believe, 2022 into 2023 and more. But all in all, we basically get the best possible out of the very small factory that we have right now.

Great. That's helpful. And then just in terms of mix, as you guys look at this 4 gigawatts of orders that you have, can you talk a little bit about the system size and your expectation around how the mix is going to shift from where we were maybe a year ago into this next couple of quarters? And are you picking up a lot of traction on the commercial side or on some of these larger systems at this point? Or are we still thinking about a lot of smaller systems at the end of the tank?

So it's a good point. And I - and you are correct. In the backlog, there's a slight tilt towards commercial and commercial intended for larger installations. We've been talking for the last few quarters after - about the recovery in the C&I space from the COVID being slower initially and ramping up recently. So that's seen in multiple places, including here in the U.S. with more community solar projects and others. And then just in general, the C&I market is in a good momentum right now, and we are capitalizing on some of that. So there is a slight tilt in the backlog towards C&I and - and with the 120-kilowatt inverter that we released a quarter or 2 ago, we're increasing - or improving our position with larger projects, which will, of course, towards second part or end of next year, we'll start manifesting itself also because of the release of the 330 kilowatts. But in the backlog today, that's not reflected, but it is slightly tilted towards C&I.

Our next question comes from J.B. Lowe with Citi.

Question was kind of a follow-up on Phil's question but on Europe. We know Enphase last week came out and put up a - at least for them, a nice expansion internationally. I'm just wondering, how do you see the competitive dynamics particularly as it pertains to them? If they're coming into Europe, how do you kind of see those competitive dynamics kind of playing out versus here in the U.S.?

Yes. Of course, I don't - I won't get into the detail of anything specific for - related to Enphase. Generally speaking, and we spoke about this in the past, the markets in Europe and Australia have become much more - a - Chinese on one hand and premium on the other hand, being SolarEdge. So it's a different competitive environment in - than in the U.S. because there are so many - there's a very broad offering of low-cost and decent-quality Chinese products. And that's the dynamic of competition in these markets, and it's very different in that regards to the U.S. And we have developed some experience and specific offering for those markets that is - that reflects that different competitive environment, especially taking to - into account that there's no rapid shutdown requirements in these markets, so you really are - or have to be either cost competitive or be able to justify the cost difference compared to the Chinese alternatives that are out there. So it's a very different landscape. And that requires a special type of approach that we've adopted over the years.

Okay. Great. And my other question was on the e-Mobility business, $70 million in sales this year. I know that it's going to be back-end loaded anyway. And then we had - and then, Ronen, we had talked previously about kind of that business being $100 million to $120 million-ish annually for the next few years, kind of see how it goes. But do you think some of the delayed sales that you expected to come in at the back half of this year will be pushed into '22 and then kind of hitting that run rate? Or is it going to be a little bit more lumpier than that? How do you guys kind of see that business for the next 18 months?

Yes. So first, to - the first part, actually, most of that is already done, so - of what we're saying for 2021. So it's not so much back-end loaded, it's - on the contrary, the dynamics of the stop and go that we've been experiencing recently is what we expect to see between now and the end of the year, and that's why we're not assuming a large number in Q4 like we might have assumed otherwise. And the expectation is to - that the project will catch up, whether that's going to be in the early part of 2022 in terms of the volumes and - or later or in 2023, it's really related maybe even to the earlier questions about recovery of the component shortages because that's what's causing these stop-and-start motions in the automotive industry. So it's kind of - we're a secondary effect to the fact that the OEMs are not producing the base vehicles at the rate that they would want to because of availability of components, and then they don't consume our offering at the rate that was originally planned. So the assumption is, yes, that it's going to catch up. When is - it's hard to say.

Our next question comes from Aric Li with Bank of America Securities.

First off, I wanted to talk about storage. Could you just talk about your specific progress on the rollout? I know that there was a little bit of a delay in 3Q. If you could talk to what was driving that and what's giving you confidence in the ramp to 70-megawatt hours for 4Q. And could you also talk about the ramp thereafter on capacity beyond the 180-megawatt hour out of 1Q? I think you talked to 250-megawatt hours out of 2Q, if you could just - whether you can affirm that or not.

Yes. So I'll start with the first question. So the rollout is progressing well. I think a point that was also an opportunity for us to clarify a bit is there are already about 90,000 installations of our inverters with DC-coupled batteries. So in terms of know-how and capability of the broad installer base to connect the DC-coupled battery to a SolarEdge Inverter, that know-how is out there. So we are supplementing with training on how to do it with our battery that is a little bit easier to install because of the wireless - various wireless connections. But that part of the rollout is going fine. The slightly lower-than-planned output this quarter was really around logistics. A lot of the parts are manufactured in China, then it's either pay more to get them delivered quickly or get them on regular ocean freight to the assembly factory and deliver a little bit less. And here, we defer to the - to getting a little bit more profitability out of the deals. In terms of capacity, definitely, as you mentioned, so the intent is the 130 - the 180 to 300 batteries a day is the milestone for the end of Q1, and the intent is to ramp that further into 2Q - Q2 and to consume the capacity of cells that we reported in the previous quarter and even more once we start getting our own cells out of Sella 2 and Kokam.

Got it. And as a quick follow-up, I think you mentioned C&I supply commitments locking in pricing earlier. But could you just talk to the potential ability to raise prices, even if only on the residential side. I know your peers have communicated a second price increase already this year at the low - mid-single-digit range, if you could just talk through your thoughts and strategy here.

Okay. So as we explained, and we're referring to pretty much the period between now and the end of the year, and in particular, considering the challenges that we are facing on margin because of the shutdown in Vietnam, on that event, we decided that it is not the right thing for us in terms of long-term thinking to transfer that cost over to our customers. In terms of longer term, we're evaluating what to do. We might - we have to look at it also regionally and also product-wise and assess the long-term implications. So what we're referring to is right now in Q4, related to the events in Vietnam, we decided not to increase pricing and shift the cost over to the customers.

Our last question will come from Kashy Harrison from Piper Sandler.

So on the utility scale side of the equation, I was wondering if you could just walk us through the investment thesis for a developer to use a power optimizer solution just given limited shading at these sites. And then what regions do you think you might have strong demand for this utility scale product?

So we're - as I mentioned also, I think, in the call, we're talking right - this product is aimed initially for the, what we call, small utility and community solar type installations. And as I also mentioned, we are optimizing the cost because the value proposition needs to fit the additional cost to the customer. And there are the classical or the long-term value propositions that we offer in terms of monitoring and reduced O&M expenses and recovering loss of energy due to mismatch in particular, with the extensive use of bifacial modules that are out there. So that's a big part of the qualification work that we are going into is ensuring that we know how to quantify for our customers the benefit including adding features and capabilities that will allow them to save some money on other elements of their operational aspects. So that's indeed the challenge, and that's what we are preparing for this product. And in that regard, I think, to encourage you to attend the Analyst Day where we can get into that in more detail. Looking at regions and customers, and this is an experience that we've gone through also initially with residential and then with C&I is you start with early adopters that, for one reason or another, have a view that they need this type of capability. Sometimes it's a large project that are on uneven land. Sometimes they might have other constraints that make it an easier decision for them to adopt this type of technology. And then over time, they understand the broad benefits and then start adopting it for their normal installations and then other people start adopting it as well. So I assume that we'll go through a similar path, and we're actually at the beginning of that path already today in small and then larger utility, but all along, optimizing the value compared to the relative increased cost.

At this time, there are no further questions in the queue, so I would like to turn the call back over to CEO Zvi Lando.

Thank you, and thank you, everybody, for joining us on the call today. Thanks.

Thank you, ladies and gentlemen. This concludes today's teleconference. Thank you for your participation, and you may now disconnect.