Good day, and thank you for standing by. Welcome to Extreme Networks' Second Quarter Fiscal Year 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please note that today's conference is being recorded. I’ll now hand the conference over to your speaker host, Stan Kovler, Vice President of Corporate Strategy and Investor Relations. Please go ahead.

Thank you, Olivia and good morning, everyone, and welcome to Extreme Networks' second quarter 2024 earnings conference call. I’m Stan Kovler, Vice President of Corporate Strategy and Investor Relations. With me today are Extreme Networks' President and CEO, Ed Meyercord; and Executive Vice President and CFO, Kevin Rhodes. We just distributed a press release and filed an 8-K detailing Extreme Networks' financial results for the quarter. For your convenience, a copy of the press release, which includes our GAAP to non-GAAP reconciliations is available in the Investor Relations section of our website at extremenetworks.com along with our earnings presentation. Today's call and our discussion may include forward-looking statements based on our current expectations about Extreme's future business, financial and operational results, growth expectations and strategies. All financial disclosures on this call will be made on a non-GAAP basis unless stated otherwise. We caution you not to put undue reliance on these forward-looking statements as they involve risks and uncertainties that can cause actual results to differ materially from those anticipated by these statements. These risks are described in our risk factors in our 10-K report for the period ending June 30, 2023, and subsequent 10-Q reports filed with the SEC. Any forward-looking statements made on this call reflect our analysis as of today, and we have no plans or duty to update them, except as required by law. Following our remarks, we will take questions. Now I will turn the call over to Extreme's President and CEO, Ed Meyercord.

Thank you, Stan, and thank you all for joining us this morning. Our second quarter results were in line with our previously announced revised Q2 outlook. We did have some highlights in the quarter. SaaS ARR grew 37%, which reinforces the value of our differentiated cloud platform. We have 44 customers who spent over $1 million on Extreme Solutions, demonstrating both customer retention and our ability to take new logos from our larger competitors, and gross profit is 62.5%, showing continued improvements and the benefit of a higher mix of high-margin recurring revenue. At a high level, the networking industry is exiting the final stage of the COVID-induced era of supply chain constraints, which has significantly impacted our business. We've made the conscious decision to put channel digestion behind us in the March quarter. Our distributors and partners have lowered inventory purchases, which we expect to accelerate in the third quarter. We expect to emerge in the fourth quarter at a much more normalized level of revenue and earnings. Our bookings trends and funnel of new opportunities are strong indicators of customer demand. While larger deals are still experiencing elongated sales cycles, particularly in North America, we continue to win against the competition on a bookings basis, with an uptick in new logos. Our EMEA business has stabilized and grown from the prior year, and APAC bookings continue to grow over the prior year. In addition to sequential and year-on-year funnel growth, we grew the number of transacting partner accounts and deal volume during the quarter. These trends and the expanded go-to-market opportunities give us confidence that we are positioned for a return to meaningful growth in fiscal '25. We've attracted a growing list of 14 managed service provider partners, exiting the second quarter with seven already driving transactions. We're positioned to expand our MSP footprint as partners are drawn to the simplicity of One Cloud, the flexibility of our unified hardware, and our unique consumption billing model. We make it simple for these service providers to deliver a seamless, high-quality networking experience to their customers. We've also made inroads establishing a private subscription offer through a highly-targeted list of large service providers; as noted at our November Investor Day, this market segment opens a $5 billion addressable market. In November, we introduced Extreme Cloud Universal ZTNA, the first network security offering to integrate network, application, and device access within a single solution. This helps move organizations to a zero-trust policy for all devices across the network. This, combined with our industry-leading campus fabric solution, extends our value proposition in helping customers manage and secure their networks. Yesterday, we launched new Wi-Fi 7 access points and the 4000 Series Universal Switches designed to help highly distributed enterprise organizations create improved network connectivity, security, and application performance. Both of these new cloud-managed platforms leverage AI-ops and machine learning to deliver faster remediation and enhance network visibility. These new products also integrate well with ExtremeCloud Universal ZTNA to enhance the network security posture. The integration of AI, security, and analytics into a single platform is a key differentiator for Extreme as it allows us to bring greater simplicity and flexibility for customers. This is why we continue to enlarge deals with manufacturers, like LG Energy Solutions, leading healthcare facilities like NHS Trust Hospitals in the UK, educational institutions like London South Bank University, Leeds Beckett, and Kingston Universities, and large venues like Wells Fargo Center and Canada Life Centre. I've made previously announced leadership changes to streamline and strengthen our go-to-market capabilities. Earlier this month, Norman Rice was appointed as our Chief Commercial Officer and is now focused on driving revenue growth and leading the company's sales, partner, and services organizations. He's successfully built our go-to-market sales motions in stadiums and venues, driving large opportunities with Verizon and Kroger, and has been at the forefront of driving our new commercial opportunities with large service providers. He has valuable experience managing revenue operations with deep knowledge of our complex supply chain environment. Our Chief Product and Technology Officer, Nabil Bukhari, is focused on increasing our SaaS revenue, in his newly mentioned role as our GM of our Subscription business. We've also deepened our bench of SaaS expertise on the executive team over the past six months with the additions of our new Chief Marketing Officer, Monica Kumar, in December; and CFO Kevin Rhodes, last May. The alignment of the team is crucial to helping accelerate growth and capture more share. The Extreme brand continues to get elevated in the marketplace through our customer wins and differentiated technology that creates more simplicity and flexibility across complex networking environments. Our promise of One Network, One Cloud remains a competitive differentiator. One Network is underpinned by our universal hardware highlighted by campus fabric, which has unparalleled campus security benefits and allows users to segment networks ten times faster than any competitor. One Cloud offers customers modern networking tools with built-in AI-ops. We're unique because we're the only provider to offer cloud choice, whether that's public, private, hybrid, or edge. We're winning deals by helping customers find new ways to deliver better outcomes such as increased IT productivity, reduced OpEx, or securing their business. The simplicity and flexibility of One Network, One Cloud remains a competitive differentiator, particularly in a time when major competitors have created complexity with disjointed solutions and uncertainty in their long-term rationalization of products and solutions. We remain the only pure-play networking company with a differentiated and integrated portfolio and a clear roadmap. We believe our exposure to the fastest-growing areas of the networking market, share gains, and new go-to-market partnerships provide ample growth opportunities to drive double-digit growth in the long term. We're forecasting market share gains with targeted partners leveraging the strength of our unique solutions for the enterprise. And with that, I'd like to turn the call over to our CFO, Kevin Rhodes, to walk us through the results and guidance.

Thanks, Ed. Despite lower revenue in the second quarter, we improved our gross margins sequentially, and optimized our operating expenses to maintain a healthy operating margin profile. Our EPS was therefore impacted less than our revenue shortfall at the end of the quarter. In the second quarter, we took proactive action that enabled us to protect our profitability while continuing to invest in our strategic initiatives. We will continue to focus on aligning our cost structure accordingly as we navigate the second half of our fiscal year. Let me get into the numbers. Second quarter revenue of $296.4 million fell 7% year-over-year and was in line with our revised outlook. Product revenue of $186.6 million fell 16.5% year-over-year, reflecting continued channel digestion and elongated sale cycles that are impacting the networking industry. These trends are consistent across both switching and wireless products. Our product backlog has normalized this quarter earlier than we initially anticipated and our bookings approximated our product revenue for the first time in four quarters. In fact, our bookings trends were positive in both EMEA and APAC, where each grew double digits year-over-year. From a vertical perspective, while total bookings fell slightly both quarter-over-quarter and from the prior year, our healthcare, education, manufacturing, and transportation/logistics vertical markets grew from the prior year. We are encouraged by this level of customer activity, which informs our view that we will be able to get the channel digestion phase behind us as quickly as possible. SaaS ARR and recurring revenue was a bright spot in our quarter. SaaS ARR grew 37% year-over-year to $158 million, driven by the strength of our renewals and activations of previously shipped products. Subscription deferred revenue was up 32% year-over-year to $246 million. As we ship products and backlog, it's generating a tailwind for SaaS growth. Total subscription and support revenue was $110 million, up 16% year-over-year. This growth was largely driven by the strength of our Cloud subscription revenue, up 39% year-over-year. Recurring revenue continues to be positive at Extreme. Total recurring revenue of $101 million grew 14% year-over-year and 6% sequentially, to now 34% of total revenue. Based on our current outlook, we expect recurring revenue to account for approximately 35% of the full fiscal 2024 year revenue. The growth of cloud subscriptions and maintenance drove the total deferred revenue to $549 million, up 23% year-over-year and 5% sequentially. Gross margin was 62.5%, up 140 basis points from the prior quarter and up 400 basis points compared to the prior year-ago quarter. This is the third quarter in a row that we've achieved 60% plus gross margin, which is proven to be an achievable level for Extreme at normalized scale. We attribute this to improvements in mix due to the higher contribution of subscription and support revenue and an improvement in supply chain and distribution-related costs. Our second quarter operating expenses were $141 million, down $12 million from $153 million in the first quarter, and up slightly from $139 million in the year-ago quarter. We plan to take additional actions to further optimize our operating expenses to the level of revenue we expect to achieve in the second half of fiscal 2024 in order to preserve our margin structure in the fourth quarter and into fiscal 2025. Operating margin for the second quarter was 14.8%, down from 17.7% and similar to 14.9% in the prior year quarter. This is the sixth quarter in a row of double-digit operating margins, also an achievable level for the company at normalized scale. All-in second quarter non-GAAP earnings per share was $0.24, down from $0.25 in the first quarter and $0.27 in the year-ago quarter. We finished the quarter with $221 million in cash and net cash of $26 million after repurchasing another $25 million of our shares. We've repurchased $153 million worth of our shares over the past five quarters. The $28.6 million of free cash flow we generated in the quarter was impacted by lower revenue and the use of working capital for purchases of raw materials and inventory based on our prior year purchase commitments. We expected recovery in cash flow as revenue recovers and component purchases become more balanced with normalized sell-through rates. Now turning to guidance. This quarter, we expect sell-through to be significantly higher than sell-in, which we believe will have a meaningful impact on our operating results. To quantify this impact, we expect a $40 million to $50 million reduction in channel inventory in the third quarter, which will allow us to cover to a more normalized level of revenue in the fourth quarter. As a result, we plan to take further cost actions to drive the recovery in earnings per share and cash flow. Heading into the fourth quarter, we expect improved sequential revenue growth based on our funnel and the seasonality of our business led by our education vertical. We believe our proactive approach to managing through this industry challenge will enable us to deliver improved growth and profitability in fiscal year 2025. For the third quarter, we expect as follows: revenue to be in a range of $200 million to $210 million; gross margin to be in a range of 59.5% to 61.5%; operating loss to be in a range of 12.4% to 8.8%; and loss per basic share in the range of $0.22 to $0.17. A basic share count is expected to be around 129 million shares. Looking further ahead into our fourth quarter, we expect revenue to be in a range of $265 million to $275 million, gross margins to be flat to slightly up from the third quarter, non-GAAP operating margin to be in a range of 10% to 13%, GAAP operating margin to be 1% to 4%, and fully diluted share count of 131 million to 132 million shares.

Thank you. And our first question coming from the line of Eric Martinuzzi from Lake Street Capital Markets. Your line is open.

Yeah. I wanted to address the leadership change here and how we're going to be approaching the channel differently than we were before. If you could talk a little bit about what Norman Rice is going to be doing? I guess, we've sort of lost touch with the channel demand. Those are my words not yours, but what are we doing to help improve that channel monitoring? What processes or is Norman putting in place?

Thank you, Eric. One of the first initiatives that Norman has implemented with our leadership teams is to analyze our customer base by separating the run-rate business, which consists of orders under $50,000, and understanding its characteristics. This segment will be more reliant on channels and can be influenced by distributors and marketing efforts. Additionally, we are gaining clarity on our project-based business by categorizing it, marking a significant change that Norman is introducing. I also want to highlight that Norman and Kevin developed our private subscription offering, which is a channel-driven initiative that we believe will be game-changing. There is increasing interest from larger service providers we are collaborating with, and we expect to announce significant deals in the latter half of this year. I previously mentioned our managed services provider partners that are coming on board, highlighting the benefits of our portfolio and technology, combined with our unique consumption billing model, which enhances efficiency in our market approach. Therefore, we are focusing on identifying opportunities and adopting a more targeted strategy towards our core business and new commercial models. Norman is exceptionally qualified to lead us in this area.

Okay. And then looking at the guidance here, just a really dramatic reset. I'm wondering was there a prior year outlook because we had a guidance reset coming out of Q1, and now we've had an even more dramatic reset coming out of Q2. What's the confidence level here? We've got one month under our belts for Q3. Are we seeing any evidence to say things are getting better as far as the sequential step up in Q4?

Yeah, Eric. We commented on the funnel and opportunities specifically, commenting on progress that we've seen in EMEA, in Asia-Pacific, and Kevin also touched on the fact that we're heading into E-Rate season, and this looks to be a pretty strong E-Rate season for us. The declines came as we were looking into Q2. Our outlook for Q2 and our plans to take down channel inventory, the reality is, we couldn't take inventory down nearly as much as we had intended, and I would say with the elongated sales cycles and with bookings pushing out the way they did, it only deepened our position in the channel. We had to make a decision on whether or not we want to manage this out over time or take it all in one fell swoop. Our view and perspective is to get it cleaned up and get normalized as we head into Q4 and turn the corner on '25. That’s how we made the decision that we're making. Demand is obviously going to be masked by inventory flowing out of the channel, and that's a $40 million to $50 million number that you heard Kevin talk about. As we go into Q4, we do have seasonality, and we are expecting more neat normal seasonality as we go into that quarter. We have the E-Rate business and we have a significantly larger funnel, and that’s what gives us confidence. So we're very focused on the cleanup here this quarter and then delivering and exceeding our outlook for the June quarter.

Thanks for taking my questions.

Thanks, Eric.

Thank you. And our next question coming from the line of Timothy Horan with Oppenheimer. Your line is open.

Thanks guys. Can you just talk about maybe the end-user demand? Are customers maybe waiting for Wi-Fi 7 or CBRS or further upgrades to Cloud? Just any color on what's going on because the step down next quarter's guidance versus what you were thinking six months ago is incredibly dramatic. The channel numbers that you just gave seems only tell part of the story.

Yes, Tim. We're seeing a more cautious outlook regarding demand. In the Wi-Fi market, some customers may be delaying purchases in anticipation of Wi-Fi 7. We've mentioned that sales cycles have stretched in the U.S., where we've received verbal commitments for promising wins for Extreme, but the actual deals have been postponed. When we consider deals in our pipeline that reach the commitment stage, we do close those deals; it largely comes down to timing. We're viewing this situation as one of timing. This is why we're providing guidance for Q4; we are confident in our projections and how we will emerge from this in Q4, but we are establishing a more conservative baseline than before. To your point, Tim, we feel a bit disappointed regarding our expected closures in the pipeline. We've reassessed that and aim to move forward with a fresh perspective. Looking ahead to fiscal '25, we may face some challenging comparisons in Q1 and Q2, but as we approach calendar '25, we expect to be in a strong position for achieving double-digit growth and continuing from where we paused.

And so Wi-Fi 7, can you maybe just talk about how much of an improvement it is for the customers or your benefits and maybe how does the pricing of the product look like your ability to supply it? And then just lastly on Wi-Fi 7, what does the competitive environment look like? And do you think this is one of the things driving the elongated sales cycles— are customers waiting for this?

Yeah. I mean, I think it's fair to say that there are going to be some customers in the marketplace that are waiting on this. The benefit that you have in Wi-Fi 7 is you have the different frequency bands and you have, in our case, higher bandwidth, which is important. We're also bringing dual bands in terms of speeds, so there's a lot more flexibility in the solution. Every time you have these upgrades, there's higher quality in terms of connectivity. In this case, there's more bandwidth, more flexibility in terms of end-user devices that we pick up on different frequencies. We have dual bandwidth capabilities in terms of how we connect to the network. The Wi-Fi 7 for us is cloud-managed in addition to our 4000 series switch, which is purely a cloud-managed, and in this, we're bringing some unique capabilities that provide a lot of advantages in terms of how to deploy and run networks, relative to the traditional CLI model where provisioning and network deployments can be done in a much more efficient and automated way. So yeah, there are a lot of benefits in what's coming out and our most recent releases, and yeah, in terms of opportunities, it could have an impact.

And when does it start shipping at scale?

We are GA at this point. So I think you would expect to see shipping from Wi-Fi 7 beginning in Q3 and really ramp and begin to ramp in Q4.

Thank you.

Thank you. And our next question coming from the line of David Vogt with UBS. Your line is open.

Great. Thanks, guys for taking my questions. Maybe to start on the competitive landscape and that dynamic, I think you guys spent a lot of time talking about that taking sort of the inventory de-stocking, pained short-term. But you also talked about normal seasonality in Q4, talking about gaining share over the long-term. Can you maybe just kind of talk about what you're seeing competitively in the market today that gives you confidence that we can get back to share gains over the intermediate and longer term? And then I have a follow-up question as well.

Yeah, Dave. Thanks. So I'll comment on that. What gives us confidence is what we see happening in the market every day. We've talked about the largest competitor in the space that has a very different cloud solution. We continue to see the industry moving to cloud, and we have a leadership position in cloud. The largest player in the marketplace has a very different cloud solution from the traditional enterprise solution. In addition to that, they continue to invest in other markets, and so the level of complexity that we're feeling in the marketplace surrounding the largest competitor is very real and opens up a lot of opportunities. We've talked about some of the larger deals that we're getting into. We continue to move up market, and you'll see us continuing to do this with some of the announcements that will come out of Extreme, where in these highly competitive and highly contested processes, we're coming out on top. You're seeing the likes of Cisco and HPE and Juniper getting pushed back and Extreme winning, and that's part of how we're upleveling our brand. That's one of the ways that we have confidence relative to the largest player. Everyone is very top of mind. The HP acquisition of Juniper— what that will mean. In our case, it means that one of our competitors will be going away. We see a lot of opportunities certainly over the next couple of years. They're looking to rationalize their product portfolios, which is going to create opportunities. In fact, it already has, where we're getting calls from customers, direct customers, and end-users in the field, as well as partners who are concerned and very unsure about what that product roadmap looks like and what it's going to look like. This gives us, these create, they create more opportunities for us.

No. Great. That's helpful. And maybe just a follow-up. You talked about a strong E-Rates easing coming up and getting back to hopefully some degree of normal seasonality by the June quarter. Recognizing that obviously the first half of fiscal '25 will have difficult comps on a year-over-year basis. Are you planning for what I would consider to be more normal seasonal behavior on a quarter-over-quarter basis as we get through June going forward? Or is there still some digestion from whether it's order growth intake, underlying demand/channel digestion that we should expect as we go through the second half of this calendar year into '25? And then, just maybe one final one for Kevin if I could slip it in there. You mentioned, obviously, double-digit margins at normalized scale, I think the phrase was. We just want to get some more color on how we're thinking about it, because I know at the Analyst Day, obviously you guys had talked about margins above, let's call it, fiscal ’22 levels back into mid-teens, but just wanted to get more color on what scale do you need to get to you to get back to margins that are more robust than, let's say, fiscal '22?

I'll address the first part of the question, and then I'll hand it over to Kevin for the second part. We're anticipating traditional seasonality as we move from Q1 to Q4 and then from Q1 to Q2. However, the core business may experience some irregularities due to new commercial initiatives that won't necessarily align with the usual seasonal patterns. For instance, some of the larger deals that we typically can't access through our private subscription offer are unlikely to follow the standard seasonal trends seen in the core business. The same applies to our MSP business, which is expected to grow more steadily rather than in a seasonal manner. Kevin, would you like to address the second part of the question?

Sure. Absolutely happy to. The reason why we gave the fourth quarter outlook is to actually show what we believe will be a more normalized. We do believe we will grow off of Q4, so we're not thinking that, that is like the new number forever because we have these opportunities with MSP and ESPO that will continue to mature and provide further growth in the future. But with Q4 being 10% to 13%, we believe that's a good jumping-off point. However, we will maintain operating margins in the double digits throughout this fourth quarter and throughout next year is our plan. In terms of like how much we can scale from where we were in '23 or '24 in the future, we really have to go and spend a little bit more time looking at where our '25, the '26 contributions are going to be to get into that higher realms of mid-teens to high-teens, even to 20% scale beyond that. We do think it's possible. I mean, we're already showing the discipline that if we need to, we could take costs out of the business to drive and keep our margins at that double-digit level. And what we need to do is, we are focused on that, to continue to scale and grow the business and generate more profitability over time, and that's exactly what Ed and I are intending to do—to continue to scale the operating margins over time.

Great. Thanks, guys.

Thank you. Our next question comes from Christian Schwab with Craig-Hallum Capital. Your line is open.

Hey. Good morning, guys. So Ed, now that it's become evident of over-earning during supply chain issues, etc., etc., and competitors not having products. When we look at your business and we baseline modest growth before we entered this period and I kind of come up with a number of about $1.1 billion plus or minus; is that kind of what you believe the business, we're going to be below that run rate, march a little bit of above that or kind of in that light and June – is that kind of our starting from your top line growth initiatives, is that fair or is that the way you think about it all?

I think it's fair. We are going to build out of this. What we've said is, and Christian, we use the language more normalized to comment on the June quarter and when you just kind of run the math on some growth on that kind of baseline business, you get to the 1.1. So I think that's a fair assessment. Kevin, I don't know if you want to add to that or make comments.

No, I think you are right, Ed. I mean, with Q4 being at that level, jumping off point there with it being the new normal would continue. We do believe that we will continue to grow the business. We will have a better growth story in the second half of our fiscal year '25 than the first half. But in general, yeah, in terms of range, $1.1 billion is the new normal about right?

Is Norman's work doing anything about moving to selling product as a service across the board and putting a mechanism in place to be more aggressive in that? Or is that something you're going to watch some of the other people in the industry do to see if there's a tremendous customer interest?

Yeah. I think you're going to see us be a lot more aggressive. I've mentioned the triumvirate of Norman stepping in and taking the lead as Chief Commercial Officer. Nabil is our Chief Technology and Chief Product Officer, but he's also running a cross-functional team on SaaS and subscription. One of the things that you're seeing is really nice growth on the subscription line and really healthy margins on that subscription business. So as we think about growth, we have plans to continue that growth on the subscription line. We also have the benefit of gross margins on that. Finally, we made a key hire, Monica Kumar, who has come and joined us. I think she's going to be the glue between our product orgs and our selling orgs, and I think we have an opportunity to be much more targeted and I would say much more aggressive in direct outreach to the market more broadly as well as more targeted with the channel, and we have some really interesting growth opportunities in the channel. I think this represents a unique opportunity for Extreme to really step up in the marketplace, and that's how we see it.

My last question deals with the recent consolidation in this space; you did a big consolidation years ago and it extremely confused your customer base about which products you were going to support and which products you were not going to support. So I think with that as a backdrop, should set you up to be well-positioned to take advantage of what could be potential confusion in the marketplace. Do you think that that will help be a competitive advantage for you to gain share?

We do. It looks like, from the announcement, that HP was very interested in the AI platform that Juniper brings to the equation and that Juniper leadership will be heading the networking side. What does that mean to the massive install base of Aruba and Aruba Technology? It raises a lot of questions. For customers, it raises an awful lot of questions. Keep in mind, Juniper has come at enterprise really from the service provider position, and so in terms of the breadth of their portfolio, they still miss this in driving the efforts. In terms of the full end-to-end enterprise solution, it's not as robust. How that incorporates and how that gets built into the Aruba enterprise solution set, there are a lot of questions out there, and I think that's going to create opportunities for us. We're very focused on a clean and simple and flexible solution in terms of our universal hardware and in terms of interfacing with One Cloud. This presents a very fresh alternative and a very clean alternative for customers that are out there. The other thing that you're aware of Christian, from our prior M&A activities, is that they baked a lot of synergy into the formula. When you look at $430 million, $450 million of expense coming out of the business, you're talking about thousands of people coming out of that business, and where they come from and how that plays out again will create disruption. As I mentioned earlier, we've gotten calls from customers, and we're getting calls from employees and partners. We think this will present opportunities potentially hiring opportunities and new growth opportunities for us.

Great. No other questions. Thank you.

Thank you.

Thank you. And I will now turn the call back over to Mr. Ed Meyercord for any closing remarks.

Okay. Thank you. Thank you everybody for participating in the call and obviously, we'll have callbacks from many of you, and we appreciate all the good questions. I also want to take time to thank our employees, customers, and partners who are participating here and for all the work as we're transitioning through this cycle and putting ourselves on more normalized footing as we've been talking about. We are absolutely looking forward to putting this chapter behind us. We're committed to innovating in the industry and continuing to deliver new solutions, and we're committed to these strategic initiatives that will drive long-term growth for us at Extreme. Thanks everybody and have a good day.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect.