Good afternoon, ladies and gentlemen, and welcome to Masimo's First Quarter 2022 Earnings Conference Call. The company's press release is available at www.masimo.com. At this time, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. I'm pleased to introduce Eli Kammerman, Masimo's Vice President of Business Development and Investor Relations. Please go ahead.

Thank you, and good afternoon, everyone. Joining me today are Chairman and CEO, Joe Kiani; and Executive Vice President and Chief Financial Officer, Micah Young. This call will contain forward-looking statements, which reflect management's current judgment, including certain of our expectations regarding fiscal year 2022 financial performance. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Risk factors that could cause our actual results to differ materially from our projections and forecasts are discussed in detail in our periodic filings with the SEC. You will find these in the Investor Relations section of our website. Also, this call will include a discussion of certain financial measures that are not calculated in accordance with generally accepted accounting principles or GAAP. We generally refer to these as non-GAAP financial measures. In addition to GAAP results, these non-GAAP financial measures are intended to provide additional information to enable investors to assess the company's operating results in the same way management assesses such results. Management uses non-GAAP measures to budget, evaluate, and measure the company's performance and sees these results as an indicator of the company's ongoing business performance. The company believes that these non-GAAP financial measures increase transparency and better reflect the underlying financial performance of the business. Reconciliation of these measures to the most directly comparable GAAP financial measures are included within the earnings release and supplementary financial information on our website. Investors should consider all of our statements today, together with our reports filed with the SEC, including our most recent Form 10-K and 10-Q, in order to make informed investment decisions. In addition to the earnings release issued today, we have posted a quarterly earnings presentation within the Investor Relations section of our website to supplement the content we will be covering this afternoon. I'll now pass the call to Joe Kiani.

Thank you, Eli. Good afternoon, and thank you for joining us for Masimo's first quarter 2022 Earnings Call. This quarter was an anomaly from the perspective of reported revenue and earnings due to supply chain problems. I'm happy to report that as of today, we have manufactured almost all of the backordered products from the first quarter, and barring any shipment delays that are out of our control, we are on track to meet the second quarter revenue expectations. We believe we have addressed the supply chain challenges we saw in the first quarter related to component shortages and limited labor availability at our manufacturing facilities. In addition, we have significantly increased our manufacturing output, which should allow us to not only meet our expected revenues but simultaneously build up a sufficient level of safety stock. I'm happy to report that hospitals are steadily returning to normal practices and procedure volumes. With hospitalization concerns about the pandemic easing, we are seeing a rebound in elective surgeries and seeing better access for our sales force within hospitals. Our installed base grew by 7% in the past 12 months due to strong and consistent customer demand for our technologies. There has been no slowdown in demand as we continue to win new contracts at a fast pace while maintaining a strong renewal rate with our existing customers. While our revenues rose only modestly in the first quarter due to the supply chain issues, we still expect to deliver double-digit constant currency revenue growth for our healthcare business this year. 2022 will be an exciting year for Masimo as we extend our reach into some very large new markets in consumer health and wellness, as well as into telehealth and telemedicine. In April, we closed the Sound United transaction ahead of schedule. The team at Sound United will be invaluable for enabling successful launches of our upcoming products over the next 12 months and beyond. The company also brings us a group of highly regarded brands and technologies that we can leverage to create some very innovative products that combine Masimo technologies with theirs. Sound United has built a broad network of global distribution channels that will serve us well as we introduce products such as our biosensing watch and augmented hearing devices among many other planned innovations. We are excited about the potential of our combined businesses to capitalize on the growing trend of moving care from hospital to home. I'll discuss more about our outlook and strategic plans later in the call. Now I will ask Micah to review our first quarter results in more detail and provide you with an update on our 2022 financial guidance.

Thank you, Joe, and good afternoon, everyone. Before I get started, I want to direct you to the earnings presentation on the Masimo website, which covers much of the detail that we will be discussing today. Our first quarter results illustrate our ability to increase earnings even in the face of supply chain issues that limited our shipments and sales growth. The strength in the demand from our customers can be seen in our driver shipments, which met our expectations by reaching 75,700 as we had our third consecutive quarter of driver shipments of approximately 75,000 units. Increased demand for patient monitoring in hospitals has been durable, as these results demonstrate. We have now shipped over 2.3 million technology boards and instruments over the last 10 years. For the first quarter of 2022, we reported revenue of $304 million, representing 2% reported growth and 3% constant currency growth. Our results were adversely affected by certain supply chain issues, which we have addressed. Had this not occurred, we would have exceeded our revenue and earnings expectations for the quarter due to our continued strong customer demand. Moving down the P&L, our first quarter 2022 non-GAAP gross margin increased 140 basis points to 67.5% compared to 66.1% in the prior year period. Our gross margin improvement was driven by favorable product mix, as we derived a higher proportion of our revenues from adhesive sensors compared to equipment. Our first quarter 2022 non-GAAP operating profit was $70 million or an operating margin of 22.9%. In comparison, first quarter 2021 non-GAAP operating profit was $68 million or an operating margin of 22.9%. Our first quarter 2022 non-GAAP net income was $53 million or $0.93 per diluted share. In comparison, first quarter 2021 non-GAAP income was $52 million or $0.90 per diluted share. Overall, for the first quarter, we achieved earnings growth that was in line with sales growth in the face of supply chain challenges that affected production volume, and our driver shipments have held steady at roughly 75,000, illustrating the strength of our core business. Now I'd like to provide you with an update on our 2022 financial guidance, including expectations for the recently acquired Sound United business, which closed three weeks ago. Due to the acquisition and timing of revenues stemming from supply chain challenges in the first quarter, we are providing consolidated guidance ranges for the second quarter and for the full year. Our guidance incorporates increased foreign currency headwinds from the strengthening of the U.S. dollar against most major currencies. For the second quarter of 2022, we are projecting consolidated revenue of $525 million to $555 million, which includes $180 million to $190 million of revenue for Sound United from the closing of the transaction on April 11 through the end of the quarter. For our Healthcare business, we are projecting $345 million to $365 million of revenue, which includes $4 million of year-over-year currency headwinds. For the first half of the year, this implies a revenue range of $649 million to $669 million for our healthcare business, which reflects 9% to 12% constant currency growth. Consistent with what Joe mentioned earlier in the call, this outlook illustrates our confidence in recapturing a large portion of the delayed revenues in the second quarter while being thoughtful about the broader supply chain environment and logistics challenges. Going back to our second quarter guidance, we are projecting consolidated non-GAAP gross margins of 56%, operating margins of 18%, and earnings per share ranging from $1.13 to $1.25. Now moving on to our full year 2022 financial guidance. For the full year, we are projecting consolidated revenue of $2 billion to $2.06 billion, which includes $660 million to $700 million of revenue for Sound United from the closing of the transaction on April 11 through the end of the year. For our Healthcare business, we are projecting revenue of $1.34 billion to $1.36 billion, which includes $17 million of year-over-year currency headwinds. This implies a constant currency revenue range of $1.37 billion to $1.377 billion compared to our prior constant currency guidance of $1.357 billion. This update reflects 9.5% to 11% constant currency growth for our healthcare business. We are also projecting shipments of at least 300,000 technology boards and instruments this year. On a non-GAAP basis, we are projecting gross margin of 56% for our consolidated business, which assumes gross margins of 36% to 37% per Sound United and 66.5% for our healthcare business. Incorporated in our guidance for the remainder of the year are higher freight and product costs, which we believe will be partially offset by increased manufacturing efficiencies and cost reduction efforts. On a non-GAAP basis, we are projecting an operating margin of 18% to 19% for our consolidated business, which assumes operating margins of 5% to 7% per Sound United and 24.8% for our healthcare business. It is important to note that Sound United's operating margin guidance includes co-development and co-commercialization investments that will drive the expected benefits of this acquisition. These initiatives will allow us to enter and expand into large and growing markets that are in order of magnitude larger than the markets we serve today. These investments represent roughly 2% of Sound United's revenue. Furthermore, this guidance includes depreciation, amortization, and non-cash share-based compensation expenses, which represent approximately 4% of Sound United's revenue. Lastly, the continued strengthening of the U.S. dollar against most major currencies has negatively impacted Sound United's operating margins by a magnitude of 2 percentage points. Moving further down the P&L, our non-GAAP non-operating expense for the consolidated business is expected to be $18 million in 2022. This is primarily comprised of the interest expense associated with the roughly $600 million drawdown against the new credit facility used to finance the acquisition. We are also projecting a non-GAAP tax rate of 25.3% and weighted average shares outstanding of $58.2 million for the consolidated business. Based on these assumptions, we are projecting a non-GAAP EPS range of $4.46 to $4.73 on a consolidated basis. To summarize, our core healthcare business is on track to meet or exceed expectations this year, and we are steadfast in our commitment to achieving long-term revenue growth of 8% to 10% for this business. I've never been more excited about our long-term financial future. For additional details on our 2022 financial guidance, please refer to today's earnings presentation within the Investor Relations section of our website at masimo.com. With that, I'll turn the call back to Joe.

Thank you, Micah. Back in February, we announced our plans to acquire Sound United as part of our strategy to be a leader in the growing trend of moving healthcare from hospital to home, as well as to deploy Masimo technology in all settings where it can be useful. With the acquisition, we announced our intent to launch some high-potential products in the consumer health and wellness area, including our biosensing watch and to create enhanced hearing on biosensing earbuds. Sound United has a healthy and growing presence with its premium brand. In addition to the brands, we saw at least four very valuable assets in Sound United that influenced our decision to acquire the company. One, a well-established network of global distribution channels with over 20,000 distribution points we can access for our upcoming consumer health and wellness product launches. Two, a connectivity software platform called HELOs that can connect any type of digital device to flow data through a network and into the cloud, which can be useful for telehealth and telemedicine systems. Three, premium brand wearable sound devices, such as Denon and Bowers & Wilkins earbuds that can serve as a foundation for creating augmented hearing devices that incorporate Masimo's advanced signal processing and biosensing technologies. And four, a strong leadership team and accomplished professionals with sales, marketing, and advertising expertise, we can facilitate a successful launch of our consumer health and wellness products over the next 12 months and beyond. In 2021, Sound United saw strong demand for its home theater products as consumers stream more content at home than ever before. Sound United has reinvested in the Bowers & Wilkins brand with numerous product launches such as the 800 Diamond Series loudspeakers, P15 and P17 wireless headphones, and iconic Zipline wireless speaker. Looking at 2022, Sound United should continue to benefit from the growth of high-resolution audio streams that should drive the adoption of premium home entertainment systems, which can process it. The company also has new products from the Bowers and Wilkins brand, such as the Panorama soundbar and new headphone models. The brand will also be growing its partnership with renowned automotive brands such as BMW, McLaren, and Global. Launch plans for 2022 include new industrial design and connected functionality across the suite of Marantz products as well as Denon expanding its reach with an enhanced offering of home wireless surround sound speakers and home theater solutions, and Polk extending its lineup with several Dolby Atmos soundbars. As you can see from the earnings presentation on our website, the Sound United acquisition increases our total market potential from $12 billion annually to over $180 billion as we expand into new, large, and growing consumer health and wellness markets. While we expect brands like Bowers & Wilkins, Denon brands, and Polk consumer products to achieve strong growth on their own, we do believe our healthcare business, including hospitals and homes, will help—with help from our entire organization—grow more rapidly and eventually constitute the vast majority of our revenues. Some of the markets I'm truly excited about are the opportunities for combined products we will be introducing, such as biosensing watches and augmented hearing devices. Just imagine the incredible audio engineering of Bowers & Wilkins, Marantz, and Denon in combination with Masimo's advanced digital signal processing and biosensing engineering. They pioneered innovations for the incredible sound we experienced with those top-tier brands, and we pioneered the use of advanced signal processing such as adaptive filters, system theory, and AI in the biosensing arena. We believe we will pioneer incredible new solutions together, all for the betterment of life. The strategic work of Masimo and consumer health and wellness and into the home with telehealth technologies began many years ago with the focused research and development efforts to capitalize on emerging use cases for our technologies. Examples of these products include the launch of iSpO2 in 2012, Radius PPG for SafetyNet in 2019 and Sleep in 2020, and as well as Radius T for temperature monitoring in 2020. And just yesterday, on the 33rd anniversary of our incorporation, we announced a limited market release of Masimo W1, our first biosensing watch, offering continuous and accurate pulse oximetry and other measurements. Our ability to help lives can go beyond the confines of hospitals and long-term care facilities. We are very excited by what we can do to help improve lives in other settings, especially at home. We will have more to say at our upcoming Investor Day in September here in Irvine. I hope you'll all be able to join us to learn more about the future of Masimo and what it will mean to the lives of many. We've expanded our mission to improve life, and we remain committed to our mission of improving patient outcomes, reducing the cost of care, and taking non-invasive monitoring to new sites and applications. With that, we'll open the call to questions.

Our first question comes from Rick Wise from Stifel. Please go ahead. Your line is open.

Good afternoon, Joe, hi, Micah. Let me ask one on the Base business and one on Sound United. The Base business, I mean, clearly came in, in the middle of your range. Help us think—Micah, perhaps I'll start with you about the setup for the second quarter for the core business. Clearly, the full year is on track. You reiterated your guidance. But maybe quantify for us what the revenues would have been, do you think, in the first quarter? And do we layer that on top of what second quarter might have been? How do we think about the cadence now as you play catch-up on that side of things?

Yeah. I think, Rick, the best way to look at it is we're providing a guidance range of $345 million to $365 million for the second quarter for Masimo. That basically implies that we're recovering a large portion of those revenues in the second quarter because we're seeing more confidence in our ability to recover the shortfall in Q1. We're also being thoughtful about supply chain challenges, just like shipping and logistics that we've experienced at the end of quarters. So, but if you look at the year-to-date, I think an important point I made in my prepared remarks is that for the first half of the year, our revenue range in the second quarter implies a first-half revenue of $649 million to $669 million for our healthcare business, which reflects 9% to 12% revenue growth on a constant currency basis. So I think that's the way you should look at it.

Okay. Got you. Joe, maybe let me turn to you and talk about Sound United. Obviously, I mean, I think that people have been—I don't know what the right word is—confused, concerned about this deal. You're laying it out very clearly your vision about the future. Maybe help us understand from several angles, what needs to be done to integrate the acquisition. Now when do we start to see this vision unfold that you're talking about? And maybe talk about the combined pipeline, both the Masimo pipeline and the Sound United pipeline. And how—and when we're going to see that truly contribute to growth, I don't know how to get clear effect?

No, no—you were right. You're great, Rick. So one, from everything that I have seen and the feedback I've gotten, both teams, Masimo and Sound United teams are really excited about this acquisition. Everyone's working really well together. The engineering team at Sound United is excited about the combined projects that we are doing. And so is the Masimo team. We've already kicked off a few product road maps and product development together, which we hope to begin seeing coming to the market in 2023. In addition, we are working on a very long-term path of ensuring the vision that we have ultimately comes to fruition for the combined companies in both the telehealth home monitoring consumer health care, as well as the home side of things. As far as when you will see the revenue impact of this combination beyond what they each are doing on their own, I think it will be 2023. But already, we're getting the benefit of the team as Sound United to think through the launch of W1 and the other products that are coming that are derivatives of W1 in the future. So I'm so far that thumbs up all around. And this is the honeymoon stage. I hope I can tell you the same thing six months and a year from now, but it feels really good.

Okay. Thank you very much.

Thank you, Rick.

Our next question comes from Jayson Bedford from Raymond James. Please go ahead. Your line is open.

Hi, good afternoon. And congrats on both managing 1Q and the close of the deal. So just a couple of questions on Sound United. What's the growth rate assumed in the Sound United revenue guide of $660 to $700?

Yes. Yes, Jayson, this is Micah. What's implied in our guidance—and we can't really give the pro forma numbers yet. We're hoping to provide those very soon as far as what last year's results were. There's—the team at Sound United is still working through their year-end audit, and they closed their financial year on a different fiscal year than us. They closed in March 31 as opposed to our fiscal year ending in December. So they just recently closed the financials for the year. They're working through the audit. We're also working through the stub period because we closed the transaction on April 11. So keep that in mind that the revenue we're guiding to for Sound United, the $660 million to $700 million is from April 11 through the end of the year. What it implies, though, in our full year guidance is that they're about a high single-digit revenue growth rate on an organic revenue growth, looking at a pro forma as well as constant currency. Keep in mind, there's a lot of currency headwinds that both businesses are experiencing. But if you back that out, we're assuming high single-digit growth for the full year.

Okay. Great. And I hate to ask another boring financial question. But Micah, the assumed operating margin for Sound United at 5 to 7 is a bit lower than we thought coming off the fourth quarter call. I think we're thinking mid-teens at least EBITDA. I think you did a good job of bridging the two. But are there temporary costs weighing down margins here in the near term? And I guess I'm wondering is sub 10% cost margin the right way to think about the business?

Yeah. No, I think they've definitely got room to improve the operating margins. They've done a good job of actually managing margins over time. But I think the way to think about it is one thing that's kind of transitory and depending on where currency goes, but they're getting about 2 percentage points of headwinds due to currency this year that they didn't have in their financials last year. So that's one piece. The other piece is we are including about 2% of the revenue for investment in co-development projects and co-commercialization projects as we try to drive the strategic initiatives of the business together. And then the other 4%, if you're trying to walk back to that you're probably assuming kind of a 13% to 14% EBITDA number is they have about 4% of depreciation and amortization and now share-based compensation in that number as well.

So that should—get back. Thank you.

You're welcome.

Our next question comes from Jason Bednar from Piper Sandler. Please go ahead. Your line is open.

Hey. Good afternoon. Thanks for taking the questions here. I wanted to start with coming back to a couple of the topical issues here at hand, supply chain dynamics and then Sound United for a follow-up. But starting with the supply chain, the hiccups have risen here for a lot of manufacturers here in the last several months, both in terms of sourcing products needed and then getting finished goods to where they need to be. So I appreciate the updated views here at the outset of today's call. But wondering what's the level of risk we should be considering and running into a similar situation, supply chain challenge going forward, be it for Masimo or Sound United. And then is there any color you can talk about or confidence you can give here to ensure that the issues that hit here in the first quarter don't repeat?

Well, we thought we were immune to it as many, many companies over the past couple of years complained about supply chain. We had always been able to mitigate them. So I guess once we — I can't guarantee you we won't have a problem again since we had one that we couldn't have predicted before. What I can tell you is there was a myriad of issues, from labor shortages to component shortages to last-minute Shanghai lockdown and shipment problems. So we believe at this point, as I said earlier in our prepared remarks, we have all the components we need to not only fulfill what we couldn't ship at the end of Q1, but what we expect to do in Q2 with the range that Michael provided. So really, the one thing that could go wrong now is shipments, shipment delays. We are reaching out to our customers that normally want the shipment towards the end of the quarter to see if they'll take it earlier so that we hopefully don't end the quarter with any potential problems. But we're doing everything we can. The one thing I'll tell you on the labor shortage, we've gone a little overboard. Not only are we making everything we need, as I said earlier, we pretty much have caught up with all of the purchase orders that we had, but we're not shipping safety; we're not making use of safety stock and much more than we had previously planned to just to make sure we can weather any hiccups. So all I can tell you, we really have a wonderful team, and they've done everything, and they're doing everything. But unfortunately, there's no guarantees.

Okay. Right. No, that's helpful. And maybe just for the follow-up here on Sound United, Joe or Mike, just bigger picture, thinking about the go-forward strategy here. I know we'll hear more at the Investor Day a minute in September. But I wonder if there's anything here you can discuss, but rather than having us all wait for four months. Just like what are the near to intermediate term plans in consumer beyond the recent W1 announcement? And here, I'd really just be curious how you find to move forward with establishing the consumer brand, what other infrastructure investments might be necessary to have a proper platform to build from. And then anything you'd be willing to share on additional pipeline items beyond the watch and the hearing aids that you've highlighted already? Thank you.

Well, I think Micah and I both can take this one. Bottom line is we have bought Sound United for several reasons. I think I articulated that during our prepared remarks. One of them is their management team and their ability to think through consumer sales, advertisement, logistics. Secondly, there are very strong distribution channels, which is over 20,000 distribution points with strong relations that have been built over decades. So we expect to use that. We're also discussing additional novel approaches to add to what they've been doing, which we will share with you later as we announce them. So a big reason for this acquisition is our conclusion that we have some really incredible products coming out without an incredible distribution channel and team. And as we tried over the last few years as we were preparing for the launch of W1 and other products, we tried to build that up organically. We have not succeeded to the level that we thought would fulfill our plans. So they are our plan. And we have additional things we're brainstorming with them, but that's really the plan.

All right. Thank you.

Thank you.

Our next question comes from Michael Polark from Wolfe Research. Please go ahead. Your line is open.

Good afternoon. Thanks for taking the question. I'm going to ask another one on the strategic direction and frame it maybe a little bit differently. The question is this, did the investment communities respond to the Sound United transaction surprise you? And in the context of $1 billion investment to purchase the asset and the market has voted by reducing your enterprise value by $6 billion or $7 billion. That's alarmingly high spread. And so I just wondered, did that surprise you? And if it did, has it catalyzed perhaps a rethink of maybe the best way forward with the consumer strategy and if there might be a different way to prosecute this vision?

Yeah. It definitely surprised me. I couldn't have imagined the way some of the investors reacted because look, I don't know why people want to invest in Masimo or why they don't. But if people got up because of the Sound United, that was really a bad decision because Sound United helps our plans for the future. And we didn't mortgage much to gain that assurance for our future. So no, the investors' reaction is a big surprise, but it doesn't at all—not at all change our thinking about the reason we did it and our conclusion that this was a great acquisition. As of this point, we told you before, if things don't work out, you make decisions, you go forward, but sometimes you can be wrong. If it doesn't work out, we'll let you know. But this is really at this point what we think is the best thing we could have done. And I'm, I going to tell you, maybe I'm more fashion, but I thought the business's job was to try to figure out what your customers want in products and services and provide that to them in an ethical fashion, improve your cash flow and improve your chances of survival in the future. That's what the Sound United acquisition does for us. And people who don't see that. I'm not one to judge them, but I hope we'll prove them wrong.

Fair and full response. I appreciate that. If I could drill into the weeds of the quarter with one or two follow-ups, I'd appreciate it. The—Mike, perhaps for you, the Board and monitor shipment number look to be solid and up sequentially in the zone of expectations, but the revenue missed. And so I just—maybe it's just me and not everyone else, but I'm just trying to bridge the variance there. How does the shipment number get there, but the revenue fall short?

Yes, Michael, the answer there is really our overall driver shipments were strong as you see from the number, and that's really driven by the amount of technology boards that we were able to get out due to the strong demand. We—as far as our Masimo-branded equipment that was kind of tied up with some of those supply chain and logistics challenges we had in the quarter. So our driver shipments would have been stronger in the first quarter had we been able to ship all those Masimo-branded drivers. So I think that, that's where you're going to see, and we've got more and more confidence of that 300,000, at least shipping 300,000 this year for the rest of the year. So I think that's the floor now, and that's what we're driving to. And I think you'll see strong shipments each quarter for the rest of the year as we start to recover on some of that Masimo-branded equipment.

Got it. So the shipments would have been higher. That could reply good color. Thank you. And last one, look, I need to do work on the consumer wearables marketplace, clearly. I was walking around Best Buy last weekend and hadn't been there in 7 years. So it was hat-orient. Where will W1 fall in the U.S. market from a selling price perspective? Is there any color you can provide? I saw the release yesterday that the pilot users get access to the device for half off and that will be coming up here in the next quarter or two. But as you roll this out in a fuller commercial launch, perhaps next year, how will the price point compare to some of the other products in the market?

There is only one will probably be in the market at $500 with services that people can sign up for monthly or annual agreements. And as far as where it lands in the market, it is the only continuous and accurate pulse oximetry with many other features that will come that we'll announce after the limited market release date. So we think it's probably just right.

Thanks for taking the questions.

Thank you.

Our next question comes from Marie Thibault from BTIG. Please go ahead; your line is open.

Hi, good evening. I did want to share a little bit more about the augmented hearing device. You can tell me if we need to wait till September, but I'd love to hear a little bit more about what that will be capable of, is this a hearing aid or is this something more that you're introducing?

Well, we have to be—first of all, we believe we will have the ability to help people experience sounds better. There might be an Rx version for it for over the counter that will get FDA clearance that will be marked for hearing enhancement, and there might be ones that are marketed as the best sound possible for individuals that will not be making claims about hearing improvement.

Okay. That's clear enough. We look forward to hearing some timelines on that. I'll ask my follow-up here away from Sound United. Would love to hear an update sort of on the litigation front, the patent front. I don't know how much you could share, but we've been certainly following the inter partes review and some of the back and forth on the lawsuit. So I would like to hear the latest or just anything factual you can tell us on the lawsuit to close the International Trade Commission?

Well, on the International Trade Commission case, we're going to go to trial in June, and we expect to have a decision in September with the final resolution in January of next year. The patents that we have in that case, we believe are great patents and spot on. So we feel really good about our ITC case. And then on the—on the District Court, which is supposed to a trial in March, we have a trade secret case. As you know, the patent case got stayed when Apple filed an inter partes re-exam on our patents, a couple of the key patents in that case have been allowed by the IPR. So they may get added to the trade secret case, or they may go through a third case, third trial. But so far, we feel really good about our cases, and hopefully we'll have some good news to share in the future.

All right. Very helpful, Joe. Thank you. And I appreciate you taking the question.

Thank you. Thank you. I think we're done for the day. We appreciate you all attending and being on the call. Our analysts are welcome to take on the limited market release of W1 as long as you agree to our goals, so that you can learn something more about what we're doing. So thank you all, and we look forward to our next call.

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