BLACKBERRY Ltd (BB) Q1 2022 Earnings Call Transcript

Good afternoon, and welcome to the Blackberry First Quarter and Fiscal Year 2022 Results Conference Call. My name is Jesse, and I'll be your conference moderator for today's call. During the presentation, all participants will be in listen-only mode. We’ll be facilitating a question-and-answer session towards the end of the conference. As a reminder, this conference is being recorded for replay purposes. I would now like to turn today's call over to Tim Foote, Blackberry Investor Relations. Sir, please go ahead.

Thank you, Jesse. Good afternoon, and welcome to BlackBerry's first quarter fiscal 2022 earnings conference call. With me on the call today are Executive Chair and Chief Executive Officer, John Chen; and Chief Financial Officer, Steve Rai. After I read our cautionary note regarding forward-looking statements, John will provide a business update, and Steve will review the financial results. We will then open the call for a brief Q&A session. This call is available to the general public via call-in numbers and via webcast in the Investor Information section at blackberry.com. A replay will also be available on the blackberry.com website. Some of the statements we'll be making today constitute forward-looking statements and are made pursuant to the safe harbor provisions of applicable U.S. and Canadian securities laws. We will indicate forward-looking statements by using words such as expect, will, should, model, intend, believe and similar expressions. Forward-looking statements are based on estimates and assumptions made by the company in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors that the company believes are relevant. Many factors could cause the company's actual results or performance to differ materially from those expressed or implied by the forward-looking statements. These factors include the risk factors that are discussed in the company's annual filings and MD&A, including the COVID-19 pandemic. You should not place undue reliance on the company's forward-looking statements. The company has no intention and undertakes no obligation to update or revise any forward-looking statements, except as required by law. As is customary during the call, John and Steve will reference non-GAAP numbers in their summary of our quarterly results. For a reconciliation between our GAAP and non-GAAP numbers, please see the earnings press release and the supplement published earlier today which are available on the EDGAR, SEDAR and blackberry.com websites. And with that, I'll turn the call over to John.

Thank you, Tim. Good afternoon, everybody, and thank you all for joining us today. The main headline for this quarter is that we have organized our software and services business around our two biggest market opportunities, mainly IoT and cybersecurity. In the past few years, we have done a good job in product development. Last year, we launched 59 new products, and the year before, over 30. Later, I'll discuss more about the XDR product that we have launched this quarter, and I will provide you an update on BlackBerry IVY. As you all know, at the same time, we were delivering our products, many of you know that we've been investing in our go-to-market as well. We have turned up the noise on our marketing, expanded our channel and partnerships, and invested more resources in the field. Now we are pivoting the organization more heavily towards the market by creating two business units: cybersecurity and IoT. By aligning the cybersecurity and IoT business units to the main market opportunities, we will drive more focus and accountability. We will also improve our agility, being able to react to the fast-changing needs of the market. And needless to say, both of these units have their own business dynamics. In order to accomplish this, we have recruited a number of new talents, especially with deep IoT experience. This includes Mattias Eriksson, who joined us from HERE Technologies, as the President of the IoT business unit. Mattias brings over two decades of relevant industry experience with a focus on strategy, operation and driving growth in the IoT business. Blackberry President and Chief Operating Officer, Tom Eacobacci, will focus on leading the cybersecurity business unit. Tom has deep enterprise software experience, and he's the perfect person to engineer the growth of this new business. From a financial reporting perspective, beginning this quarter, we will provide revenue and gross margin by business unit as well as other selected metrics. We believe that this additional color will help investors gain a better understanding of the underlying performance of the business units, ultimately driving shareholder value. So let me start by reviewing with you the IoT business unit. This business reaches primarily QNX, but also includes IVY, Certicom, Jarvis and Radar. The business had a strong quarter. Revenue came in at $43 million, which represents an increase of 48% year-over-year. Of course, a year ago, it was a pandemic hard-hit quarter. Gross margin was 84%. IoT ARR was $86 million. This growth in both revenue and ARR was achieved despite the global chip shortage continuing to impact the auto market in the near term. The scale of the impact varies by region and by OEM. One of our largest customers in North America has indicated that production in Q2 will be impacted or may be impacted by up to 50%, but others are less severe. Generally speaking, Q2 appears to be the low point, with Q3 improving and Q4 further so. The impact also looks to be smaller than that of the pandemic last year. So currently, we don't see a need to change our revenue outlook for the year, but we'll continue to assess the impact with our customers, and we'll update you again next quarter. Just as a reminder, our IoT revenue outlook remains at $180 million to $200 million for the fiscal year. In contrast to the production-based royalties, however, revenue from design activities, i.e., the development seat and professional services is strong. Unlike Q1 of last fiscal year when COVID was becoming a major issue, confidence in our OEM appears high, and we've seen a lot of design activities in progress. We are particularly pleased with two design wins this quarter. The first was with Volvo Group, who selected QNX RTOS and hypervisors on a whole truck basis, meaning that our technology will power multiple ECUs throughout the truck. Second, we further strengthened our position in the EV market with a design win with Shanghai-based WM Motor. The QNX OS and hypervisor will power their all-electric W6 SUV vehicle. In total, this quarter, we had 28 new design wins, with 17 in auto and 11 in GEM, the general embedded market. Notable design wins also include Bosch and Visteon. These design wins span hypervisors, digital cockpits, multiple-socket ADAS platforms and high-definition maps. On the GEM front, the wide range of applications won in the quarter include surgical robotic arms, industrial 3D printers and nuclear product stations. Design wins such as Volvo demonstrate two key secular trends that QNX business benefits from. The first is the consolidation of lower compute power ECUs towards a few higher-power chipsets, such as the ARM and x86 versions. It is on these higher-power chips that QNX operates, and as this consolidation continues, it gives QNX ever more opportunity in the car. Secondly, there is a trend of increasing software content per vehicle, particularly in safety-critical systems, such as ADAS, gateway and digital cockpits. This is, of course, where QNX shines with the highest level of safety certification and has the strongest competitive advantage. Our strategy to focus on safety-critical systems, which we put in place a number of years ago, has allowed the business to benefit from these trends, ultimately leading to higher average revenue per car. This strategy is delivering higher value design wins and will benefit the royalty revenue backlog. The backlog metrics is calculated using contracted price and future production volume estimates provided by the customer when the design is awarded. It's important to note that this is a customer's estimate. The backlog increased from $450 million last Q1 to $490 million this first quarter. This is a 9% increase year-over-year despite the pressure on new auto designs over the last 12 months. Strategy Analytics, a leading independent research firm, recently published that QNX software is now embedded in over 195 million vehicles. That is up from 175 million confirmed the year before. Now for a brief update on progress with IVY. Driving the IVY opportunity forward remains one of our key priorities, and we're working closely with AWS to achieve this. Product development remains on track and in line with the road map. We are on target for the early SS version to be available in October and for the production versions to start shipping next February. Customer discussions and workshops are continuing, and we remain positive about how things are progressing. This quarter, an additional 5 automakers engaged to explore IVY. This means that we're now engaged with almost all of our major QNX customers. We recently announced the launch of the IVY Advisory Council. Industry leaders from a number of key verticals have signed up, including Telus Telecommunications, one of the big three companies in Canada; GEICO Insurance; HERE Maps; and Cerence, which is the voice recognition auto business. Development of relevant and exciting new use cases for the IVY platform remains a key priority, and we believe that the council could greatly assist us with this. Delivering relevant maps and experiences provides a higher engagement model with both the consumer and the enterprise. Last quarter, we launched the IVY Innovation Fund, established to invest in startups adopting the IVY platform. Since then, we had a great response from the market, and we have reviewed over 200 prospective customers. We recently announced our first investment in an exciting startup called Electra Vehicles. Unlike other startups in the battery management space, Electra aims to not only analyze activity but to also actively manage battery operations using artificial intelligence. Vehicle sensor data on IVY will feed their AI-driven platform, dynamically determining factors such as driving behavior and environmental conditions to optimize battery performance. In summary, IVY is progressing well, and we remain very focused on the various elements needed to make this a strong growth business and succeed. Now let me move to our cybersecurity business unit. This business unit includes our Spark endpoint security and endpoint management product, UEM, as well as AtHoc, the critical event management software, and Secusmart, secure voice and text product. GAAP revenue for the quarter was $107 million. As mentioned during the last earnings call, we now switched to GAAP-based revenue only. Gross margin was 57%, ARR was $364 million, and dollar-based net retention was 94%. Over the last couple of years, the prevailing narrative has been that detection and remediation is the most important part of cybersecurity. However, the founding principle of Cylance and one of the main reasons for our acquisition is that prevention is far better than cure. That's why we're a market leader in endpoint protection. Stopping threats before they execute and start doing harm is clearly a better strategy than trying to shut them down afterwards. This quarter, we demonstrated this strategy with our next-generation AV product named Protect, which blocked the DarkSide ransomware, believed to have been the cause of the Colonial Pipeline cyber incidents. In fact, the 2015 version of Protect also blocked most variants of the same ransomware, obviously six years ahead of its time. We have the most mature AI engine in the space and the ability to block ransomware years ahead of time without the need for constant internet connectivity. This demonstrates the power of our prevention-first strategy. Protect was also shown to prevent other high-profile threats, such as the Conti ransomware and others. In addition to large enterprise customers, this AI-driven automated protection also resonates with small and medium-sized customers that don't have the resources to establish their security operation centers. We see strong sequential growth in new business pipeline of around 18%. In the quarter, we announced two significant new products, both of which are part of the extended detection and response, or XDR strategy, which is the latest evolution from endpoint detection and response. The first product is Blackberry Gateway. With employees based remotely and not in the office, as well as mobile becoming more prevalent, the traditional moat-and-castle model of network assets is no longer efficient or effective. In fact, VPN users, once authenticated, often have access to the entire network, including on-prem and other SaaS applications for the length of their session. Blackberry Gateway is a zero trust network access product that uses the Cylance AI to continuously authenticate network activity. The cloud AI evaluates over 30 risk factors such as downloading behavior, DNS queries, time of day, etc., to determine unusual activity. The second product released this quarter is Optics 3.0, which is the latest version of our endpoint detection and response market, or EDR. This new version allows for new real-time responses, both offline and online, which continues to be a differentiator for us. Importantly, this new cloud-enabled product will allow data to be stored centrally in a cloud-based data lake. This, along with a new search engine and query language, allows threat hunters to gain greater visibility. Switching to the sales front. UEM revenue in Q1 was down year-over-year, in part due to the work-from-home ramp-up that we absorbed last year but didn't repeat. Let me reassure you that UEM remains an important part of our cybersecurity business, and we are fully committed to it. In the quarter, we continued to secure business with our highly regulated customers. In financial services, including Mitsubishi UFJ, Bank of China, Bank of France, and Union Bank of India; in government and health care, we conduct business with the government of Canada, the U.K. NHS Health Services, University Health Network Canada, the United States Department of Energy, Department of Commerce, the Netherlands Ministry of General Affairs, the Australian Department of Environmental and Energy, the White House Communications Agency, U.S. Department of State, Department of Treasury, and the United States Department of Defense. Also, within the U.S. federal government, we increased the number of AtHoc cloud FedRAMP users by 6% sequentially. From a market perspective, this quarter, we gained new business through partnerships we recently announced with Verizon, Vodafone, and Telus. With Microsoft, we have integrated our Critical Event Management product alert with Microsoft Teams. Further, as we've communicated in the past, our cyber suite, our UES platform, is on target to integrate with Intune by the end of August. This quarter, we stepped up our sales hiring. The market for high-quality talent is competitive, and it has taken a little longer to increase our headcount, but we currently expect to end Q2 with around 23% more sales representatives than at the start of the year. This expanded reach will help Blackberry be in more competitive bake-offs, where our product stands out. With the recent increase in sales hiring, many of whom will start during Q2, our billings goal is likely to be more heavily weighted to the second half of the year. Therefore, revenue is likely to be at the lower end of our $495 million to $515 million range that we provided last quarter. Moving on to licenses. Revenue for the quarter was $24 million, which is better than expected because some business came in early. Gross margin was 75%. The negotiations for the sale of a large portion of the patent portfolio are ongoing and we have made good progress. In fact, we have started negotiating the definitive agreement. Revenue for Q2 is likely to be in the range of $10 million to $15 million for the IP, as stated last quarter, so this has not changed and is due to monetization activities being limited by ongoing negotiations. In terms of the full-year outlook for the licensing business, should the sales not complete, we expect revenue to be around $100 million. Let me now hand the call over to Steve.

Thanks, John. So my comments on our financial performance for the fiscal quarter will be in non-GAAP terms, unless otherwise noted. Please refer to the supplemental table in the press release for GAAP and non-GAAP details. We delivered first-quarter total company revenue of $174 million. First-quarter total company gross margin was 66%. Our non-GAAP gross margin excludes stock compensation expense of $1 million. First-quarter operating expenses were $138 million. Our non-GAAP operating expenses exclude $32 million in amortization of acquired intangibles, $6 million in stock compensation expense, and a $4 million fair value adjustment on the convertible debentures, which is a non-cash accounting adjustment largely driven by market conditions. The first-quarter non-GAAP operating loss was $23 million, and the first-quarter non-GAAP net loss was $27 million. Non-GAAP earnings per share was a $0.05 loss in the quarter, and our adjusted EBITDA was negative $6 million this quarter, excluding the non-GAAP adjustments previously mentioned. I will now provide a breakdown of our revenue in the quarter. Cybersecurity revenue was $107 million and IoT revenue was $43 million. Software product revenue remained in the range of 80% to 85% of the total, with professional services comprising the balance. The recurring portion of software product revenue was approximately 90%. Licensing and other revenues, as John mentioned, was $24 million. This is a little higher than expected as deals came in early. The monetization activity remains limited while negotiations for the potential IP sales continue. Now moving to our balance sheet and cash flow performance. Total cash, cash equivalents and investments were $769 million at May 31, 2021, a decrease of $35 million during the quarter. Our net cash position decreased to $404 million at the end of the quarter. First-quarter free cash flow was negative $35 million. Cash generated from operations was negative $33 million, and capital expenditures were $2 million. Bear in mind, the first quarter of our fiscal year typically has a higher cash requirement due to the payment of annual bonuses and other demands at this time. That concludes my comments, and I'll now turn the call back to John.

Thank you, Steve. Before the Q&A, I'd like to update everybody on a few things. Although we have organized along the go-to-market lines, there are a number of future high-growth opportunities that our factory lab is working on that harness the power of our entire technology portfolio. The first is supplying our AI/ML engine in IoT. One good example of this is using Cylance in a car. You may or may not remember, at CES a couple of years ago, we demonstrated an early version of how our Persona technology that identifies inappropriate access from user behaviors can be applied to drivers of vehicles. We also demonstrated how our protected endpoint protection can be used to protect connected cars from cyber threats. These are just two of the many potential use cases that we are currently looking at. The second is our data lake. Drawing data from an increasingly larger number of sources allows for greater visibility and determination of the real level of risk across an organization. This is essential to zero trust applications. This applies not only to XDR but also the increasing sensor-rich auto environment, autonomous driving and smart cities. Centralizing data and insights through our data lake can enable a whole new business model in the future. The third area is related to the recent U.S. SBOM, which stands for software bill of materials, the executive orders that aim to secure the software supply chain. This comes in light of the recent incidents, including SolarWinds and the Colonial Pipeline threats. Combining products from our IoT products, including our Jarvis code-scanning tools, our QNX-embedded operating system and our Certicom technology with our prevention-first AI-driven cybersecurity products and services means Blackberry offers a comprehensive approach to this issue. We have begun working closely with various government and standard-setting bodies. So before we open the line for Q&A, I'd like to summarize the key messages again. We have organized our software and services business around our key market opportunity, strengthening our management team in the process. QNX made solid progress this quarter. We're pleased with the strong design activities and the pipeline of new design wins that saw royalty revenue backlog increase year-over-year. We continue to demonstrate real progress with IVY with tangible steps forward, such as the launch of the Advisory Council as well as the first investment by the Innovation Fund. We launched two important new products that expand our XDR strategy, and the AI-driven prevention-first approach continues to be our focus. We're also increasing headcount, particularly for our new UES products. Our main focus is on growing the top line, and therefore, we'll continue to increase investments in both our software business units as we anticipate double-digit billing growth this year. Finally, we remain optimistic about a successful conclusion to the negotiation of the patent portfolio itself. And with that, I would like to ask Jesse to open the line for Q&A, please.

Thank you, speakers. Participants, we will now begin the question-and-answer session. Speakers, our first question is from the line of Daniel Chan of TD Securities. Your line is now open.

Hi, John. You stated that your QNX royalty revenue backlog increased to $490 million from $450 million last year. Over what period of time do you expect that backlog to be recognized over?

Typically, the highest duration is usually four to seven years, peaking at four years before starting to decline towards the end of a car's life cycle. Sometimes it may extend beyond that.

Okay, that's helpful. Thanks. And then you also talked about the IVY Advisory Council. Can you talk about the level of commitment partners have agreed to as part of this council and whether you plan to include major OEMs on it?

Yes. It's a great question. But before I answer that question, let me make one more comment on the backlog because I have also gotten some feedback regarding that our backlog number is very conservative. I would tell you that it is on a conservative side, and we get it from directly from the OEM when we win the design win and they give us the estimate. We also have not included professional services backlog and developer seat backlog. So in the future, when we have a very solid methodology so that we just don't do much guessing, we'll get a grounded set of math, you will see that backlog number go up, and we are going to include that. But that may take a couple of quarters. And to go back to answer your question regarding the Advisory Council. They're there to help us define use cases, particularly in the verticals that they operate in, where IVY could be of great help. I don't want to exclude any OEM, but I don't think OEMs would want to do that. They tend to do it one-on-one with us directly because this adds value that they don't want to share. So it will be proprietary to themselves. I hope that makes sense.

It does. Thank you.

Next question is from the line of Mike Walkley of Canaccord. Your line is now open.

Hey, John. Thanks for taking my question. I was hoping you could update us on Blackberry's UEM strategy. I know there's some tough comps because of the pandemic from last year, but could you just update us on the strategy? Is it still a large piece of your cybersecurity business unit?

Yes. That’s a good question. Our platform is composed of UEM and UES. UEM is very strategic to us because it is our gateway to a lot of our major customers who are completely reliant on us for security. So our strategy is to continue expanding our footprint in the regulated industry, and we’re also looking at more price-sensitive and non-regulated industries. We want to make sure that our UES platform, which is our endpoint security platform, also connects and runs on it. One of the largest installed bases outside of my space here is Microsoft Intune. This is why we’re excited about the fact that we’ll have the Intune connected release by the end of August, I believe. Basically, the strategy is to continue to expand the footprint that we have in verticals like financial services, healthcare, and government. That’s very important to us. The UEM roadmap is highly geared towards security and certifications and compliance. And then to bring your own device, or BYOD environment, that’s the kind of the roadmap that UEM is focused on. The UES will, of course, expand on all the cybersecurity antivirus products. So that's our major strategy of how we approach the market.

Great. No, that's very helpful. And just my follow-up question, just on the gross margin by division. Thanks for the updated business metrics. How should we think about gross margin trends for the businesses over time, particularly the cybersecurity business? Where could those gross margins get to over time as the business ramps? And any reason why it might have fallen a bit sequentially?

Yes. The best way to answer the question is that especially with cybersecurity, we're trying to move towards a high-volume enterprise software model, and we have not deviated from that. The gross margins should be highly competitive, somewhere between 75% to 80%. I think that will be a very good target to aim for, for the cybersecurity business.

Okay. And what needs to happen to potentially get there from where you are today? What would be that timeframe you think?

Timeframe, I think probably a year out. If you want me to guess that, like based that on, because if you recall, we actually have a lot of increases in headcount this quarter. In fact, our quarter ends in August, and some of them have committed to sign on and are yet to start. Given them the time for 9 to 12 months, 6 to 9 months getting up to speed and at the same time, cultivating the pipeline to make the sales cycle work, I think about a year out, I should see some good results from this class of incoming team members.

Great. No, that's helpful. Thanks for taking my questions.

Next question is from the line of Paul Treiber of RBC Capital Markets. Your line is open.

Hi, thanks and good afternoon. First of all, a follow-up question on sales. You mentioned in the outlook or the prepared remarks that you expect bookings to show double-digit growth for the year. How should we think about the ramp or the trajectory over the year?

As I said earlier, we recently had a lot of increases in headcount in sales. So the bookings need to be back-ended this year and then continue on for next year, obviously. So I don't know if that answers your question.

And the rate of growth there, like where you expect it to go to?

Yes, on bookings, we do expect that towards the end of the year, we do expect a double-digit percentage growth.

On cybersecurity revenue, this quarter saw a decline based on historical and GAAP numbers. You mentioned UEM; could you provide more detail on what your customers were doing? Did they leave, and can you explain what occurred there?

No. I think it's quite steady and stable. We didn't see the growth that we're hoping for, but it will be forthcoming because we just released the EDR products. We talked about cloud version, the latest Optics 3.0. These were just released a quarter ago. We are seeing that pipeline being built up, and it is looking to turn into billings and business. So I don't see any major movement one way or the other. But people are interested in EDR, and I believe that they should be interested more in Protect. That's our job to make sure that the message comes across. And I definitely could demonstrate. One thing you can look at the Blackberry-Cylance product combination, none of these major viruses, yes. None of these major viruses have actually hit our user base, touch wood. And so that shows the power of our product.

Next question is from the line of Trip Chowdhry of Global Equities Research.

Very good execution on the product front. Two questions.

Thank you.

First, regarding the battery management system. I was wondering, this is definitely an incremental market for you. There are three parts of the business model, the way I look at it. There could be a design win, there could be a production part of it in the software, and there could also be a subscription part to the software that is running and managing the batteries. Among these three things, is it all three components? Or is it only the software and subscription regarding the battery management software that QNX is running?

Yes. So first off, it's a little early for me to answer the question. I have a preference. The preference is usage-based revenue or a monthly subscription-type revenue. That will be my preference. Of course, that will have to be in agreement with the OEM. So demonstrating that in IVY use cases – this is one of the most important things that we need to do in the next 3 to 6 months. A demo is being put together, and it will not be available until probably the end of this calendar year, as our full engineering team just started working on it. So in the meantime, we'll try to figure out the answer to the question that you posed. Again, I have a strong preference for this to be either usage-based or monthly recurring.

Wonderful. The second question I have regarding your exceptional machine learning models you have, and definitely, currently, your Cylance machine learning AI models work only with your products. Are you exploring? Or do you think it makes business sense to open up your machine learning models to other OEMs or ISVs and then charge for connection or charge per second APIs? Because your product, which is gateway security. I think that is very normal. And again, that's another incremental revenue opportunity you can get over a period of time. So I was just thinking, since you have the best training models available, just licensing them or any other business model that can provide more revenues to you. Your thoughts on that would be appreciated. And again, very good execution on the product front.

Thank you. We haven't thought about licensing those models to other applications, maybe I would say that. However, we are embedding the lightweight agent in IoT devices, including medical equipment and industrial equipment. Some of those other technologies we have, like the mobile threat detection and prevention, also uses the model. So it's being used in a different way. From a business perspective, we didn't think about doing licensing, although I could explore that. But we are more focused on embedding in endpoints.

Next question is from the line of Paul Steep from Scotia Capital.

Can you maybe – either this one may be for both you and Steve, and I'll just make it one question. You can parse this up as you like here. Can you give us some context around the cost base? Obviously, you disclosed last quarter that you had 3,497 employees globally. And then earlier in this call, you talked about increasing the number of reps by 23% at the end of Q2. So I’m trying to square up how we’d want to think about your cost base moving forward. Whether you've just incrementally shifted resources, or is this like net new adds that we should be thinking that are temporarily going to get added and then come to productivity, as you pointed out earlier?

Yes. We have not done any major or even minor reduction in force. We have moved some resources around more for functional investment reasons, not for the reduction of people. So it's probably best for you to think about it as incremental.

That's helpful. Maybe just the last one as well. In terms of new cybersecurity products, you're talking about giving the team time to ramp up. But maybe talk to us a little bit about what you're seeing from inbound client interest because you've launched a significant number of products, been on a bit of a role here in terms of new product launches.

You're assuming you're talking about the cyber side. Yes. Probably most of the conversations center around the Protect product. I would say, if I think about the larger opportunities and sites that we have won, the key winning product is Protect. This is why you heard me say several times on this call, we're going to double down on the Protect side because it's a differentiator for us. Additionally, the AI/ML model that we have could be embedded and it could be embedded without having to be updated, so it has been valid for a very long time. This could potentially open up larger opportunities when thinking about high-volume installations. Now, what we're trying to do is position the XDR product. We discussed the new one called Gateway, and that provides zero trust architecture, which government entities are extremely interested in these two areas.

Thank you, participants. I'll now turn the call back over to John Chen, Executive Chair and CEO of Blackberry, for closing remarks.

Thank you, Jesse. Thanks, everybody, for joining us. I know it's late on the East Coast, so I want to just say hopefully you're doing well. And I want to thank some of you who attended our annual shareholder meeting yesterday, and I'm looking forward to speaking with you folks soon. Have a great evening.

Thank you, speakers. That concludes today's conference call. Thank you all for joining. You may now disconnect.