Super Micro Computer, Inc. Q2 FY2025 Earnings Call

Good afternoon and thank you for attending Supermicro's Second Quarter Fiscal 2025 Business Update Conference Call for the second quarter, which ended December 31st, 2024. With me today are Charles Liang, Founder, Chairman and Chief Executive Officer, and David Weigand, Chief Financial Officer. At the end of today's prepared remarks, we will have a Q&A session for sell-side analysts. Additionally, the Company will not address any questions regarding the delay in the filing of the Company’s fiscal year 2024 10-K and 10-Qs due thereafter. During today's conference call, Supermicro will address business and market trends from the second quarter of fiscal 2025, including our financial outlook and operations, our strategy, technology and its advantages, our current and new product offerings, and competitive industry and economic trends. We will discuss estimated financial results, but references to any financial results are preliminary and subject to change based on finalized results contained in future filings with the SEC. By now, you should have received a copy of today's news release that was issued after the close of the market and is posted on our website, where this call is being simultaneously webcast. Any forward-looking statements that we make are based on facts and assumptions as of today, and we undertake no obligation to update them. Our actual results may differ materially from the results forecasted, and reported results should not be considered as an indication of future performance. A discussion of some of the risks and uncertainties relating to our business is contained in our filings with the SEC, and we refer you to those public filings, including our most recent annual report on Form 10-K. During this call, all financial metrics and associated growth rates are non-GAAP measures other than revenue, and cash and investments. This call is being live broadcast on the Supermicro Investor Relations website and is being recorded for playback purposes. An archive of the webcast will be available on the IR website and is the property of Supermicro. Our third quarter fiscal 2025 quiet period begins at the close of business, Friday, March 14th, 2025. And with that, I will turn it over to Charles.

Thank you, Michael, and thank you to everyone for joining us. We have some important updates today on our financial filings, operational progress, technology innovation, and business opportunities, as we cross the midpoint of fiscal 2025. I’ll begin by reviewing some key financial highlights from the December quarter. Our preliminary fiscal Q2 net revenue is projected to range between $5.6 billion and $5.7 billion, marking a 54% year-on-year increase at the midpoint. Despite some negative impacts on cash flow and market misperception due to the 10-K delay, we achieved an average market quarter. Driven by sustained AI demand from both existing and new customers, our growth trajectory for fiscal year 2025 remains promising. Highlighted by the beginning of our transition from Hopper to Blackwell GPUs, we expect the growth in new generation platforms to accelerate as supply ramps this quarter and beyond. We have confidence that our calendar year 2025 growth could be a repeat of calendar year 2023 if not better, assuming the supply chain can keep pace with demand. Our preliminary fiscal Q2 non-GAAP earnings were in the range of $0.58 to $0.60 per share, versus $0.56 last year, representing approximately a 5% year-on-year growth. Non-GAAP gross margin was approximately 11.9%, and non-GAAP operating margin was approximately 7.9%. Margin was temporarily under pressure due to the 10-K delay disruption, the new product R&D investment, and customer and product mix. In a separate press release issued today, we announced a private placement of $700 million in new 2.25% convertible senior notes due in 2028 to support our rapid business growth immediately. We have also privately amended a portion of our existing convertible notes due in 2029, with all investors participating in the amended notes. This will support our growth including Supermicro 4.0 initiatives, Datacenter Building Block Solutions (DCBBS), and some brand-new GPU platform architecture design. Before diving into the details of our operational progress, let me begin by sharing an update regarding our financial filings. Our financial team and our new auditor BDO have been fully engaged in completing the audit process. Based on our progress to date, we are confident that our fiscal year 2024 form 10-K and the first two quarters of fiscal year 2025 Form 10-Q will be filed by February 25th, 2025. As previously stated, the Special Committee found no evidence to support the former auditor’s reasons for resignation. However, over the past two quarters, we have added senior leaders in corporate communication, operations, finance, legal, and compliance departments. We will continue to add more top experienced leaders to build a stronger corporate foundation for our rapidly growing and expanding global business, including the CFO, CCO, and other positions. As you know, when a company grows its business fourfold in three years like Supermicro, adding more senior leaders is also a natural requirement, especially if we know we will continue to grow strongly in the future. Moving on to our technology progress, we are excited to announce that our NVIDIA Blackwell products are shipping now. We have begun volume shipments of both air-cooled 10U and liquid-cooled 4U NVIDIA B200 HGX systems. Meanwhile, our NVIDIA GB200 NVL72 racks are fully ready as well. Utilizing our system building blocks, we are going to soon offer more brand new platforms for customers seeking further optimized, higher density, and even greener AI solutions. While most key components are ramping at full speed, it will take some time to fulfill our current AI solution backlogs. Some customers also need more time to finish their DLC data centers buildout. At the same time, we see strong new demands continuing from enterprises, CSPs, sovereign entities, and hyperscalers. We are expanding and enhancing our total liquid-cooled datacenter infrastructure solutions featuring the latest DLC technology, exemplified by the xAI Colossus, the world’s largest liquid-cooled AI supercomputer. Supermicro is the disruptive leader in driving industry-wide adoption of DLC technology, which reduces customers' OpEx and achieves green computing. We expect more than 30% of new data centers worldwide to adopt liquid-cooled infrastructure within the next 12 months, driven by the rapid and continued growth of AI. Green computing deserves to be everywhere in the world. Our DLC long-term investment and leadership provide a sustainable competitive edge and economies of scale, far ahead of the competition. Supermicro’s Datacenter Building Block Solutions consolidate servers, racks, networks, storage, water towers, software management, on-site deployment, cabling, and service for an end-to-end solution. The true value of Datacenter Building Block Solutions is to save power, reduce space, and decrease water consumption, resulting in up to 40% lower TCO for our customers according to our TCO calculation. It accelerates new datacenter deployments and helps modernize existing infrastructure in weeks or months, rather than quarters and years, significantly improving datacenter TTD (time-to-delivery) and TTO (time-to-online). We are expanding our Datacenter Building Block Solutions to include more key subsystems quarter after quarter and will become a true one-stop shop data center partner to the whole industry soon. On the production front, our new Malaysia campus will soon ship products to our regional partners. Our Taiwan and European production capacity are also growing significantly. In Silicon Valley, we are rapidly expanding our manufacturing sites to increase our DLC rack-scale production capacity. The U.S. campuses boast an impressive 20 megawatts of power, enabling us to produce over 1,500 DLC GPU racks per month in the U.S. To better support our key partners and align with current government initiatives, when needed, we are also ready for other domestic manufacturing expansions in various regions across the U.S. These strategic expansions will ensure we meet the increasing demand for our products and services, while maintaining our commitment to key partners for quality, security, TCO, and again, TTD and TTO. To summarize, we have been a product and technology leader in the IT industry for over three decades. As we continue to strengthen our internal operations and expand our U.S. and global manufacturing footprint, we aim to turn these progresses into value for shareholders, customers, and partners. Our first-to-market advantage of delivering the most innovative AI infrastructure technology with Blackwell, coupled with exceptional product quality, service, software, networking, and security with Datacenter Building Block Solutions, will continue to reinforce our partnership as the premier U.S.-based datacenter infrastructure solution provider. With our expanding technology leadership and today’s AI trends, we believe it will result in a similar growth trend for us as seen in 2023. With that, I am confident we will finish this fiscal year strongly, with revenue in the range of $23.5 billion to $25 billion and I believe we have the potential to reach $40 billion for fiscal year 2026. Before passing the call to David for the financial overview, I want to thank all of our partners, customers, investors, and Supermicro team members and express my deep appreciation for their continued support. With that, I will now turn the call over to David.

Thank you, Charles. Please note that these numbers are preliminary and unaudited, and are subject to change upon completion of review by management, our audit committee, and additionally, our independent audit firm has not completed its review procedures with respect to such preliminary financial information. So to start, we again expect Q2 fiscal year 2025 revenues in the range of $5.6 billion to $5.7 billion, up 54% year-over-year. Again, growth was driven by demand for air-cooled and DLC rack-scale AI GPU platforms. AI-related platforms again contributed over 70% of revenue for Q2 across enterprise and cloud service provider markets. The Q2 non-GAAP gross margin is approximately 11.9% versus 13.1% last quarter due to lower margins from product and customer mix. And you'll recall that on the Q1 earnings business update call, we guided down 100 basis points for this quarter. The non-GAAP operating margin is approximately 7.9%, which excludes $82 million in stock-based compensation expenses versus 9.7% in Q1 due to those lower gross margins. Other income and expense is approximately $8 million, consisting of $15 million in interest and other income offset by $7 million in interest expense. The tax rate is approximately 15% for GAAP and 17% for non-GAAP. GAAP net income ranges from $315 million to $325 million and non-GAAP net income ranges from $375 million to $392 million. Non-GAAP net income excludes $63 million in stock-based compensation expenses, net of the related tax effects of $19 million. GAAP diluted EPS is approximately $0.50 to $0.52 versus prior guidance of $0.48 to $0.58. Non-GAAP diluted EPS is approximately $0.58 to $0.60 versus guidance of $0.56 to $0.65. We expect a GAAP diluted share count of 636 million and a non-GAAP diluted share count of 647 million. The closing inventory was approximately $3.6 billion versus $4.9 billion last quarter. CapEx was $28 million. Cash used in operations was approximately $240 million versus cash generated from operations of approximately $409 million in Q1. Supermicro began the second quarter with approximately $2.1 billion in cash and recorded approximately $320 million in GAAP net income for the second quarter. Cash was provided from lower inventory and other sources totaling $1.5 billion. And the company used cash to pay down accounts payable by $1.2 billion, we realized higher other receivables from purchase rebates and prepaid inventory of $484 million. We had increased accounts receivable of $335 million, we also reduced bank loans by $346 million net, and we incurred capital expenditures of $28 million and had other uses of cash totaling $87 million. This resulted in a reduction in cash during the quarter of $660 million, thereby ending the Company’s second quarter fiscal year 2025 quarter with $1.4 billion in cash at the end of December. Now I want to point out, we have continued to prudently manage our working capital and for the month ended January 31st, 2025, we ended with approximately $2 billion in cash. Turning to the balance sheet and working capital metrics compared to last quarter, the Q2 cash conversion cycle was up to 104 days versus 97 days in Q1. Days of Inventory was 78 days compared to the prior quarter of 83 days. Days Sales Outstanding for Q2 was 47 days versus 42 days last quarter while Days Payables Outstanding was 21 days compared to 28 days last quarter. In a separate press release issued today, we announced a private placement of $700 million of new 2.25% Convertible Senior Notes due 2028, and we privately amended our existing $1.7 billion Convertible Senior Notes due 2029. The Company is reconfirming that no previously issued financial statements require a restatement. The Company, however, made certain adjustments to the preliminary unaudited results for the fourth quarter of fiscal 2024 that it announced on August 6, 2024. The adjustments recorded in the results for the fourth quarter of fiscal year 2024 include an increase in net sales of approximately $46 million, an increase in the cost of sales of approximately $96 million, which includes a charge due to an increase in inventory reserves of approximately $45 million; there was also an increase in operating expenses of approximately $5 million. Until the Company’s fiscal year 2024 financial statements are filed, the Company is required to reassess its accounting estimates for financial reporting. The charge for inventory reserves results from an unanticipated decline in the market value of certain components that were held in the Company’s inventory or on non-cancellable purchase orders at the end of fiscal year 2024. Collectively, these changes resulted in a downward adjustment to the previously announced preliminary unaudited fiscal year 2024 and fourth quarter of fiscal year 2024 GAAP and non-GAAP diluted net income per common share of approximately $0.09 that’s based on post-split diluted shares outstanding basis. The foregoing adjustments are to previously announced preliminary unaudited financial results and, as such, they do not constitute a restatement. For the third quarter of our fiscal 2025, we are expecting net sales in the range of $5 billion to $6 billion. We expect the GAAP and non-GAAP gross margin to be approximately 12%. We expect GAAP and non-GAAP operating expenses to be up approximately $17 million sequentially, and GAAP and non-GAAP other income and expenses to be a net expense of approximately $12 million. We expect GAAP net income per diluted share of $0.36 to $0.53, and non-GAAP net income per diluted share of $0.46 to $0.62. The company’s projections for GAAP and non-GAAP net income per diluted share assume a tax rate of approximately 10.7% and 12.7% respectively, a diluted share count of approximately 642 million shares for GAAP, and a diluted share count of approximately 653 million shares for non-GAAP. The outlook for Q3 of fiscal year 2025 GAAP net income per diluted share includes approximately $65 million in expected stock-based compensation expense and other expenses, net of related tax effects of approximately $17 million, which are excluded from non-GAAP net income per diluted share. So again, I want to point out, revenues for the trailing four quarters are between $20 billion and $21 billion. And for fiscal year 2025, we are updating our revenue guidance from a range of $26 billion to $30 billion to a new range of $23.5 billion to $25 billion. So we are very happy to announce that the company has raised money through the issuance of new bonds, and we will continue to improve our liquidity as our growth requires it. I want to end by saying that the final financial results reported for this period may differ from the results reported here, based on the review by BDO, our new independent registered public accounting firm. We expect to complete our fiscal year 2024 audit by the February 25th filing extension date that we have been granted by Nasdaq. So, Michael, turn it back to you.

Hi, good afternoon. Two questions for me, if I could. First, I was wondering if you could talk a little bit about the $40 billion fiscal 2026 revenue outlook. What informs your confidence there? If you could shed any light on backlog or pipeline or product roadmap that is informing the outlook, that would be great. Thank you.

Yes. I mean, our product line continued to grow. We have an industry-standard product line plus lots of chipset, including some confidential product under development. And we have a customer engaged with us for those projects. So this year, even with a 10-K delay, we grew about 60%. Last year we grew 110%. So the coming year, fiscal 2026, at this moment, we believe at least we will grow 65%, which I believe is a very conservative estimation. And the past in production capacity. I mean, the utilization rate in the USA is only about 55%. Taiwan's utilization rate is only about 60%. Malaysia's utilization rate is still about 1% only. So there is a lot of room to grow for us.

Great. Thank you, Charles. And just as my second question, I was wondering if you could talk about the mix of Blackwell and Hopper servers in the quarter. Not looking for anything specific, but was it different from what you may have expected? Was Hopper stronger? Was Blackwell affected by any supply chain constraints? Thank you.

We have both products ready. Hopper has been a very mature product, and we have the GB200 from Blackwell fully ready in production. For the B200 HGX, we also have a 10U air cooler and a 4U liquid cooler, both fully ready for production. We've accumulated a strong backlog and continue to receive many new orders. While we don't disclose specific percentages, it’s clear that more customers are interested in the B200 and GB200, and we have all of them ready for the market.

Hey, good afternoon, you guys. Thanks for taking the questions and congrats on what's a pretty solid print in deliverance of news here. I guess two if I could. The first is just on gross margins. Dave, what's a good way to think about June Q gross margins in the context of your guide? And then just as the second part of my first question, what's a good way to think about gross margins through the Blackwell cycle? This is obviously a key question for people and they want to remove the concern off the table that there could be material margin pressure through the Blackwell cycle. So those two, and then I have a follow-up. Thanks.

Thank you for your question. For sure, when products become mature, like H100, H200, then we had to face price competition strongly. But for Blackwell, it doesn't matter whether they are GB200 or B200, for sure, whenever they are new products, our margin will become much better. And especially when talking about liquid cooling, we believe DLC or overall liquid cooling market share will grow all the way to 30% or even more in the next 12 months. In terms of liquid cooling, in the last 12 months, I believe we have offered a majority of global liquid cooling. So when faced with a Blackwell opportunity, most customers tend to go for liquid cooling. I believe we have a much better position. It can just throw a point on there. Hey, look, let me just add that while most of us are focused on the gross margins, but rightly so. But don't miss the critical point that we're driving operating margins above our targets that translates into shareholder value.

So, Ananda, this is David. One thing I would add is, if you look back to what happened with H100, as Charles mentioned, Supermicro was the company that had a stable platform which became a market leader. And so that helped our margins as they crept up to 18.8%. Now, of course, we're targeting, we said we target 14% to 17%, but the question is, to your point on Blackwell, what will the competition be able to deliver? And I think that's going to be a big indicator of margins. We feel like we're in pretty good positions because we've already been, yeah.

Yeah, appreciate that guys. And then the follow-up is on the REV Guide. Charles, the $40 billion. So a couple of things. You mentioned calendar year 2025 could be similar to calendar year 2024, which is about 40% growth. So that would suggest maybe $8 billion on average in the September, December quarter of revenue. And then the $40 billion, the at least $40 billion for fiscal 2026 would tend to suggest maybe at least $12 billion on average for the March and June quarters of fiscal year 2026? So is that sort of what you're talking about? And then what gives the confidence, I guess, what's the thought process underpinning that $40 billion and those kinds of quarterly revenues? And is it GPUs, as well as custom ASICs as the TAM opens up? So just kind of a customer question there as well. Thanks. That's it for me.

Yeah, thank you. Again, whenever there is new technology, we have a good chance to grow, right? Kind of like this time, Blackwell, right? And kind of DLCC liquid cooling. And again, we have a much higher capacity ready for liquid cooling compared with the market. Last year, we grew 110%. And this year, basically, we will grow about 60-something percent. Next year, fiscal year 2026, I believe 65% is a very conservative estimation. And personally, I hope we can grow more than that, but that’s to be conservative.

Yep. Thanks for taking my question and have a couple of questions as well. Maybe just to start off, Charles, I think the last time you mentioned, which was in 2024, that we could expect sequential revenue increases in the medium term on a quarterly basis. When I sort of look back at it in hindsight, it looks like what derailed that sequential growth to some extent was the product transition from Nvidia in going from one product generation to another which also drove some change in customer behavior. As you're thinking about the revenue target here for $40 billion for fiscal 2026, is there an underlying assumption that you won't see a similar customer behavior change towards the next generation product as Nvidia goes through a transition again in that timeframe, or is there something that I'm missing in that sort of overall product transition that we should expect from your GPU supplier? And then I have a quick follow-up.

Yeah, I mean for calendar 2025, for example, I believe we should be pretty able to repeat what we experienced in 2023. In 2023, H100 was launched and we were ahead of the competition. So we grew very well. In 2025, we are facing the same opportunity now, except we are now transitioning from our old air cooler to the new liquid cooler. And in terms of liquid cooling, especially DLC, we have a major market share, and we have huge capacity, with 1,500 racks per month capacity ready. Additionally, we already have many customers already approved, who are already preparing for deployment in high volume. So once Blackwell enters volume production, I believe we will have strong growth. And now we are just preparing all the logistics including the system enclosure, thermal solutions, and of course GPU supply from our vendor, NVIDIA. So we are well prepared and once logistics are ready, we are ready to ramp up our growth.

Thanks for taking my questions. I have two. The first one is on gross margin. Overall, do you think industry margins are now under secular pressure given more competition from other AI server manufacturers? And is liquid cooling really a competitive advantage which you can charge more for, or is that also becoming commoditized since it looks like everyone seems to be offering their version of liquid cooling? So David, how are you thinking about the long-term gross margin range for your business? And I have a follow-up on revenues.

Certainly. So what I would say about gross margins are that, number 1, what we count on, Ruplu, is being the first to market with the very best solutions. And so right now, we have shipped the GB200, for instance, and we're very confident in its quality as a product. And that's really what helps to drive good margins. So it's not just liquid cooling, it's really stable systems that have high quality, high reliability, and also really the best performance. So I think that our advantages in liquid cooling were already demonstrated in the prior quarters. And it is really our Datacenter Building Block Solutions that give us a plan for the future. And so we have a lot of things planned for the future, but Datacenter Building Block solutions are one of those where we offer a lot more solutions for the complete data center at all levels. So again, we haven't changed our target margin. And yes, there is competition. There's always going to be competition. But I think that if you look at how we've performed historically and our ability to engineer in all the latest technologies, I think that's our moat, that's our advantage.

Yeah, let me add a little bit. I mean, the DLC, everyone is talking about they have a DLC solution, but how many competitors really have a DLC operational solution even in high volume? I guess it's very minimal. Last year, I believe we shipped at least 60% of worldwide liquid cooling solutions. That means those are competitors indeed. They are ready, but they do not have the experience yet. Talking about Datacenter Building Block Solutions, not many providers are able to offer on-site deployment and on-site cabling, and on-site servicing. And now with DLC, with 150KW per rack, or even more powerful racks, I believe the on-site premium cabling service becomes a very important value to customers. And we are the company that has exactly all our experience and all our successful stories.

Okay, for my follow up, if I can ask, as new efficient AI models like Deepsea come about, how are you thinking about the impact on your business? And as you move from training to inference, what is Supermicro doing to further penetrate the enterprise vertical? I know you have enterprise customers, but for those enterprise customers who don't have a large engineering presence, what is your strategy for attacking that customer base as well as for sovereign customers? Thank you for taking my questions.

OK. So for deep-seeking, I mean, for sure, software can always be more efficient quarter after quarter. So we know that. But the industry's expense really depends on financial plans. So I believe the market size won't shrink because of deep-seeking. And in terms of enterprise, we have been in the enterprise market for more than 10 years. And our team in enterprise has been much stronger than ever before, especially with our service team, management software, and end-to-end data center solutions. I believe it's the right time for us to grow quickly in the enterprise segment.

All right. Thank you. Quick question here. Can you tell us whether or not backlog is up quarter-over-quarter for the December quarter?

So we don't generally give out backlog figures, Nehal. But what we can say, though, is that backlog tends to follow the chip cycle. And so, when you have new chip solutions coming out, you'll see backlog start to build as solutions become dependable and reliable. And then they'll tail off as the products mature. And so with the expectation of some of the new chips coming out, we believe that you'll see growing backlog industry-wide.

Thank you. And then I apologize in advance, this question is going to sound a bit Turkish, but Charles, you characterize a $40 billion target at 60% year-over-year growth. And given that fiscal year 2025 is going to be around 60% year-over-year growth and likely impacted by the 10-K delay, therefore 60% year-over-year growth for fiscal year 2025 is potentially conservative. But I mean, is historical year-over-year growth really a good indicator of future demand? Have you looked at the actual pipeline of demand and said, yep, we believe that this is the, how big is the pipeline and this is a reasonable conversion rate, and therefore $40 billion is indeed very reasonable?

Yeah, very good question. From both, we validate the business from all different dimensions. From our historical growth, in the last few years we have been growing more than 60% year-over-year, basically, except this year, right, due to the 10-K delay, and we have strong cash flow constraints. So we grew, we may grow only about 60% or more, but other than that, I believe looking forward, in the next few years our growth should be more than 60% every year. And second, from our customer demand, from our customer backlog, from our customer commitments, and sales commitments, it looks like $40 billion is a relatively very conservative target. OK, still a little bit confidential, but I'm happy to share. I mean, it's like ours, right scale building block solution. Customers want to build in their ROIC, we have ambition for them. Same thing, a customer wants to build their data center, we will have ambitions for them. And today we offer more and more key components. For example, liquid cooling, all kinds of liquid cooling pumps, water towers, dry towers, and other kinds of tables. I'd be too new to share. I mean, anyway, all the people building a data center need those key components. We try to provide all of them, including software, management tools, and experience. So I hope the customer can one-stop shop with Supermicro to build their data center, reduce their time to market much quicker and also cheaper. And the total cost, right? And quicker to build their data center. And that's power consumption, better quality.

Hi. Thank you for taking my question. Charles, I was wondering if you could break down the factors or maybe David, you know, driving the reduction in the 2025 revenue guidance. How much is maybe pricing-related? How much do you think is related to delays or availability of Blackwell? On how and the impact on Hopper demand and then maybe how much was related to your 10-K and maybe customers not feeling so great about doing business with you until that's filed.

Yeah, I would say, Jon, that probably the biggest factor was just the delay in new technology because we were, when you think about it, we were all set to go. We were all set to ship with liquid cooling. We were ready. But the problem was that not everything else was. So that was certainly a huge impact. I think, obviously, the 10-K delay was a distraction. But it's more about technology for us because we count on being early to market. And so that’s what creates the big jumps that we have, the kind that took place last year from Q3 to Q4 when we went up $1.5 billion in one quarter. But remember, we finished the four quarters that ended June 30th at $15 billion. And now here we are, two quarters later, and now we're at a trailing four quarters of over $20 billion. So, we have the dynamic to accelerate really well when the technology is there, and the customers want it. And I think if you look at all of the spending predictions and intentions that are out there, you can see the money being put in place to spend money on data centers and on data center solutions. And that's why we're here. Yeah. So we're working on a number of different fronts to raise additional capital, which we just did with some of our actually, the investors that put money into us previously with our bonds. So they came back and provided additional capital for us. So we will, we've always said we want to use our balance sheet as we can to generate additional funding for our growth. But we, just like we're preparing on the engineering side, we'll also prepare on the capital side.

Thank you, Jay. We're out of time. Thank you for attending the Supermicro conference call and we'll catch up with you soon. Thank you.

That will conclude today's conference call. Thank you for your participation and enjoy the rest of your day.