Hello, everyone. My name is Emma. Welcome to the Viavi Solutions Fourth Quarter and Full Year 2024 Earnings Call. 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 will now turn the conference over to Vibhuti Nayar, Viavi Solutions, Head of Investor Relations. Please go ahead.

Thank you, Emma. Good afternoon, everyone, and welcome to Viavi Solutions fourth quarter and full year 2024 earnings call. My name is Vibhuti Nayar, Head of Investor Relations for Viavi Solutions. And with me on today's call is Oleg Khaykin, our President and CEO; and Ilan Daskal, our CFO. Please note, this call will include forward-looking statements about the company's financial performance. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations and estimations. We encourage you to review our most recent annual report and SEC filings, particularly the risk factors described in those filings. The forward-looking statements, including the guidance that we provide during this call, are valid only as of today. Viavi undertakes no obligation to update these statements. Please also note that unless we state otherwise, all results discussed on this call, except revenue, are non-GAAP. We reconcile these non-GAAP results to our preliminary GAAP financials and discuss their usefulness and limitations in today's earnings release. The release, as well as our supplemental earnings slides, which include historical financial tables, are available on Viavi's website at www.investor.viavisolutions.com. Finally, we are recording today's call, and we will make the recording available on our website by 04:30 P.M. Pacific Time this evening. Now, I would like to turn the call over to Ilan.

Thank you, Vibhuti. Good afternoon, everyone. And now I would like to review the results of the fourth quarter of fiscal year 2024. Net revenue for the quarter was $252 million, which was at the midpoint of our guidance range of $246 million to $258 million. Revenue was up sequentially by 2.4%, and on a year-over-year basis was down 4.4%. Operating margin for the fourth quarter was 10.9%, which was above the midpoint of our guidance range of 9.5% to 11.8%. Operating margin increased 160 basis points from the prior quarter and on a year-over-year basis was down 80 basis points. EPS at $0.08 at the high end of our guidance range of $0.06 to $0.08 and was up $0.02 sequentially. On a year-over-year basis, EPS was down $0.02. For the full fiscal year, revenue was $1 billion, down 9.6% on a year-over-year basis, primarily due to conservative spend by service providers and NAMs. Operating margin for the full year was 11.5%, down 410 basis points from fiscal year 2023 and full year EPS was $0.33, down $0.22 from the prior year, primarily due to lower year-over-year revenue. Moving on to our fourth fiscal quarter results by business segment. NSE revenue for the quarter came in at $182.2 million, which is at the lower end of our guidance range of $179 million to $189 million. And on a year-over-year basis, NSE revenue was down 7.9% for the quarter. NE revenue for the fourth quarter was $158.5 million, which is a 9.7% year-over-year decline as a result of continued conservative spend by service providers and NAMs. SE revenue was $23.7 million and up 5.8% from the same period last year, partially supported by revenue that was pushed out from Q3. NSE gross margin for the quarter was 62.1%, which is flat on a year-over-year basis. NE gross margin was 61.3%, which is a decline of 40 basis points as compared to the same period last year. SE gross margin was 67.5%, which is an increase of 190 basis points from the same period last year and was driven by product mix. NSE's operating margin for the fourth quarter was 1.8%, which is an improvement of 360 basis points sequentially and 400 basis points lower than the same period last year. NSE's operating margin was at the low end of our guidance range of 1.4% to 3.6% due to lower revenue. OSP revenue for the quarter came in at $69.8 million, which was above the high end of our guidance range of $67 million to $69 million and was up 6.2% on a year-over-year basis as a result of strength across all products. OSP gross margin was 53%, which is an increase of 640 basis points from the same period last year and was primarily driven by higher revenue, favorable product mix, and production ramp at our new manufacturing facility in Chandler. OSP's operating margin was 34.8%, which is up 50 basis points sequentially and a 530 basis points increase on a year-over-year basis as a result of the higher gross margin fall-through. OSP's operating margin exceeded the high end of our guidance range of 31% to 34%. Moving on to the balance sheet and cash flow. Total cash and short-term investments at the end of Q4 was $496.2 million compared to $486.1 million at the end of the third fiscal quarter of 2024. Cash flow from operating activities for the fourth quarter was $26.2 million versus $23.5 million in the same period last year. During the quarter, we purchased 1.3 million shares of our stock for about $10 million. For the full year, we purchased 2.3 million shares for about $20 million. We have approximately $215 million remaining under our current authorized share repurchase program. The fully diluted share count for the quarter was 224.2 million shares, down from 224.6 million shares in the prior quarter and versus 225.5 million shares in our guidance for the fourth quarter. CapEx for the quarter was $3.8 million, compared to $7.4 million in the same period last year when we were completing the construction of our new facility in Chandler. In June 2024, we initiated a restructuring and workforce reduction plan to improve operational efficiencies and better align with the current business needs. We expect approximately 6% of our global workforce to be impacted and estimate to incur approximately $15 million of restructuring charges in connection with this plan. As a result of this initiative, we anticipate achieving by the end of fiscal 2025 an annualized cost savings run rate of approximately $25 million, which will mainly benefit our operating expenses. Moving on to our guidance. We expect that the first half of fiscal 2025 will continue to experience a conservative spend environment by service providers and NAMs. That said, we believe that we are nearing the bottom of the down cycle and we expect a gradual recovery in demand in the second half of this fiscal year. Given the lingering softness, we are guiding for the first fiscal quarter of 2025, revenue in the range of $235 million and $245 million. Operating margin is expected to be 10.8% plus or minus 90 basis points and EPS to be between $0.05 and $0.07. We expect NSE revenue to be approximately $164 million plus or minus $4 million with a breakeven operating margin plus or minus 100 basis points. OSP revenue is expected to be approximately $76 million plus or minus $1 million with an operating margin of 34% plus or minus 100 basis points. Our tax expenses for the first fiscal quarter are expected to be about $8 million plus or minus $500,000 as a result of jurisdictional mix. We expect other income and expenses to reflect a net expense of approximately $3.5 million, and the share count is expected to be about 224.2 million shares. With that, I will turn the call over to Oleg.

Thank you, Ilan. Viavi end-market spend environment continues to be conservative, particularly the North American service providers. Despite these headwinds, our revenue came in at the midpoint of our guidance with stronger OSP revenue partially offsetting weaker NSE demand. Our EPS was at the higher end of our guidance range. Starting with NSE, the fiscal fourth quarter NSE revenue came in at the lower end of our guidance range. NSE revenue declined 8% on a year-over-year basis, driven by the softer demand from service providers and wireless NAMs. We believe that the decline in NSE demand is bottoming out and we should start to see a recovery in the second half of the fiscal year. A bit more color on that. The first is field instruments demand remained largely at the maintenance levels due to the absence of major network build-outs and upgrades by tier one service providers, particularly in North America. That said, the investment in data center fiber interconnecting by tier two operators, together with recent comments by major service providers regarding their fiber plans, leads us to expect a pickup in field instruments demand in the second half of fiscal 2025. Our wireless demand continues to be impacted by sharply reduced R&D and production CapEx spend by major wireless NAMs, who have reduced investment in response to significant cutbacks in 5G deployment by wireless operators. One positive recent trend we are seeing is the emergence of many new customers pursuing ORAN development. However, their cumulative spend is still relatively small. Other parts of NSE are faring much better. Fiber Lab and production demand was slightly up. We expect the upcoming transition to 1.6 terabits and ramp of PCI Express 6.0 to drive recovery and growth during fiscal '25 for Fiber Lab production. Mil/Aero business continues to be a bright spot, seeing year-over-year growth in revenue driven by strong customer demand for communication, avionics, and positioning, navigation, and timing products. We expect this business segment to enjoy strong demand throughout fiscal '25. SE segment grew year-on-year, helped by enterprise orders that were pushed out from Q3. We are seeing a lot of interest in our AI OPS products and expect it to be a growth driver for fiscal '25 and beyond. As we look at Q1 fiscal '25, we expect a seasonally weaker demand driven by similar dynamics as in Q4, continued demand weakness from the service providers and wireless NAMs, leading to overall weaker NE and seasonally weaker SE revenue, offset by continued strength in Fiber Lab production and Mil/Aero business. Looking ahead at fiscal '25 for NSE, we expect the conservative spend environment to persist for the remainder of calendar '24 and a gradual demand recovery in the first half of calendar '25. Now, turning to OSP. The fiscal fourth quarter OSP grew on a year-over-year basis, mainly driven by higher demand for anti-counterfeiting and 3D sensing products. Overall, OSP results exceeded the higher end of our guidance range. Looking ahead, we expect OSP to be sequentially up in the September quarter, mostly driven by seasonally stronger demand for 3D sensing products. Overall, we expect fiscal '25 OSP demand to be similar to fiscal '24. To summarize, fiscal '24 was a challenging year for Viavi and the industry. While we expect the soft market environment to persist for the remainder of calendar '24, we anticipate the start of a gradual recovery in the first half of calendar '25. I would like to thank my Viavi team for managing through this challenging environment and express my appreciation to our employees, customers, and shareholders for their support.

We're ready for the Q&A, Emma.

Thank you. Your first question comes from Ruben Roy with Stifel. Your line is open.

Thank you. Hi, everybody. Oleg, thanks for the detail around how you're thinking about sort of the near-term environment and then the, you know, sort of first half of next calendar year. I guess, can you drill in a little bit on, you know, sort of how you're thinking about inventory levels at your customers, I guess, by field instruments and then also lab instruments? And then, I had just one or two quick follow-ups. Thank you.

Sure. I mean, there's really no inventory to speak of. I mean, all of our deliveries for field instruments to our customers are just in time and it mainly coincides with whenever they are doing any kind of major expansion project or a technology upgrade or things like that. There's also, obviously, when I say we see our revenue at the maintenance level, you know, there is this constant churn, that big chunk of our quarterly revenue is just churn. And it's just basically low of large numbers, big install base, you know, the batteries die, equipment gets damaged, and they periodically replace whatever needs to be replaced. And, you know, it's been a fairly consistent number for the past several quarters, which, you know, makes me feel a bit better because it just shows you that the first thing customers come back to is they start replacing what's been damaged. As companies begin to explore significant new projects, we've received updates from AT&T and are also observing interest from tier two players, such as Lumen, which recently held a call. Many of these companies are working on fiber inter-networking between hyperscale data centers and are actively placing orders for projects. While I'm not certain about the current equipment inventories for networking gear, I suspect they are depleting. Furthermore, as they discuss plans to resume expansion and technology upgrades, we see this as promising news for us. On the 11 production, that is also pretty much important for new equipment. And it usually comes in when they are developing next-generation products. They start placing orders in the fiber area and the high-speed compute area. You know, high-speed computers driving PCI Express 6.0 and the, you know, upcoming 1.6 terabits. I mean, the budgets are open and the CapEx is flowing and we are seeing, you know, purely as soon as the equipment is available, they want it. So, in that respect, we feel pretty good. But there's also probably further away in the second half of the fiscal year or first half of the calendar '25, the 1.6 terabits is flowing into the module manufacturing. And we're seeing a lot of interest from the major AI players to drive upgrades in their contract manufacturing factories to be able to deploy 1.6 terabit modules and products.

Yes, very helpful, Oleg, and you hit my follow-up on the 1.6 terabit side, so thank you for that. I guess then I'll shift over to just a quick follow-up for Ilan on the restructuring. Ilan, you talked about, you know, the OpEx savings through the fiscal year. Maybe you can put a finer point on, you know, sort of how you're thinking about that, you know, between, you know, R&D and projects, you know, versus sales and marketing, and how we should kind of think about modeling that through the year in terms of the savings, you know, as it hits the model? Thank you.

Sure. So, thanks for the question. And obviously, as I mentioned earlier in the prepared remarks, most of it will be a reduction of the overall operating expenses. We don't see any of our major, you know, R&D projects being impacted or delayed due to this initiative. So, these are, you know, across the board of the operating expenses, but none of, you know, the initiatives that we drive in terms of the development will be impacted. And also, as I mentioned earlier, the full realization, you know, will be by the end of the year. So, it's more of a 2026 kind of net spend there.

Got it. Thank you.

Your next question comes from the line of Ryan Koontz with Needham. Your line is open.

Great. Thanks for the question. Certainly appreciate your comments about 5G. That doesn't sound like it's coming back around anytime soon. Wanted to double-click a little bit on your comment around data center interconnect for the fiber players. Are you seeing demand there from the data center operators who are leasing dark fiber or are they leasing actual, you know, connectivity and bandwidth from the service providers on a wholesale basis?

So, I mean, it varies across different data centers operators, but I mean, for the biggest ones, they basically build data centers and then they take a vendor who lays fiber and they lease those fibers from them. And what's the little difference is, you know, when a service provider lays a fiber, there's a lot of dark fiber. And they generally don't connect the dark fiber until they need it, maybe years later. What we're seeing with data centers, they're laying fiber. And they also initially started doing the same thing, just lay the fiber, connect a few strands, and, you know, I'm going to lease them, and then when I need it, you turn it on. What they are finding is that they need to turn on additional fibers and additional bandwidth comes a lot faster than everybody thought. And more importantly, it becomes also much more sensitive, the quality of performance of that fiber, right? In terms of the latency, you know, the speeds and things like that. So, they're actually putting pretty strict service level agreements as to what performance that fiber needs to deliver. And that actually plays very much to our strength because what they are realizing is traditional built fiber is fairly unreliable and you cannot turn it on as you need it, right? So, we are now working with the data center operators and with the people who provision fiber to bridge this gap to make sure as the fiber gets deployed, you actually characterize it and you know exactly what you're getting for. And then, you can monitor it throughout the life. And when you need to turn on the next wavelength, it happens very quickly, which usually means you actually connect everything and you only by just turning on. It becomes a software switch rather than rolling a truck and starting to connect the fibers and then finding out that things may not work or things like that. So we're seeing the level of evolution and forethought in deploying fiber network, truly changing the traditional paradigm that the service provider has been doing. And I guess it's the tier two players who are responding more, more proactively to the demand of data center operators, and they're the ones who are winning the business, and I think they view it as their new business model going forward.

Fascinating. Thank you for that, Oleg. And just following up on another big segment. You're within the broadband sector, I know that's been pretty depressed. You've talked about previously some pushouts in cable. Are you seeing any signs of life in cable? And obviously, we're seeing, I assume, you're seeing some pushouts in fiber and these sort of things that would be driving the fiber access industry. Any comments around broadband?

Sure, on cable. So, the cable upgrade is underway, but unlike in the previous things where they would just buy everything in one quarter and just kind of roll it out, they're doing it over multiple quarters, which leads you to a smaller bump up in demand within the quarter. But on the other hand, it provides for a smoother shipment over the multiple quarters. And I think part of it is because since the fiber to the home players have slowed down or stopped their deployment, I think the pressure is a bit less. However, you know, I saw comments, you know, and AT&T does appear to be serious about resuming their aggressive push for fiber to the home next calendar year. I expect the competitive pressure on cable to accelerate and we will probably see more aggressive spending by them as well. And you know, the other area that cable was concerned about is fixed wireless. And so far, it has been, you know, has not been a factor in terms of competitive pressure on them to do anything. And as you pointed out earlier, I mean, as I said as well, 5G deployment I think will be the last piece that's going to start recovering. And, you know, I think earliest will be the end of our fiscal year or kind of middle of next year because I'm not seeing any kind of meaningful movement there. And in fact, all the major NAMs have really kind of gone into hibernation mode where they continue to do kind of advanced research, but not much in terms of the accelerating new products to market.

That makes a lot of sense. Thank you. And just one last quick comment on kind of the operations side. Like your inventory on your balance sheet was down quite a bit. Any comments around that? Are you able to kind of sell what you forecasted and what would be driving the step down in inventory in-house?

During the supply chain shortage, we had to commit to many non-cancelable and non-refundable products, and several semiconductor companies have forced that situation upon us. As a result, we accumulated components inventory. We have been actively working to reduce that inventory. Additionally, in our anti-counterfeiting manufacturing, we are holding a significant amount of raw materials. As the demand for anti-counterfeiting products is beginning to rise again, we have been using the raw materials and semi-finished goods, aligning our inventory more closely with the current demand rate.

Perfect.

It's more to categorize it as a more normalized level now. I mean and it will now, you know, fluctuate, you know, relative more to revenue as opposed to kind of the prior cycle.

That's right.

Your next question comes from the line of Mehdi Hosseini with SIG. Your line is open.

Yes, thanks for taking my question. The first one has to do, Oleg, can you tell us how the quarter progressed, especially in terms of booking? Was there significant erosion throughout different business units, service providers, CSPs, and so forth? Or did it start? We can just carry through. And I have a follow-up.

Well, you know, actually, I'd say, different from the prior quarters, I mean, what we are seeing is the forecast that we kind of assume early in the quarter largely holds. So, we've been seeing fewer decommits or cancellations. The only big cancellation we had in, and it was not really a cancellation, our major customer reduced their order by a third, which was on the wireless NAMs. Had that order come through, actually, we would have beaten the high end of our guidance on NSE and it was really a major wireless NAM decided to take a, you know, less product because of slowness in the market. We don't generally track kind of rely on book-to-ship ratios because, you know, the way our market works, demand works. The June quarter and December quarter are usually stronger, and we get a lot of bookings within the quarter. And the September and March are generally weaker, and we get, you know, a lot less bookings within those quarters. So, I look more like, the way I gauge the relative health of the funnel is that what kind of bookings we enter the quarter and expectations and how well do they hold up or, you know, there's a left to go. You know, we forecast the bookings and then we track how many of the bookings show up as they're supposed to show up. And the way it makes me feel a little better is they actually showing up. Whereas before they would get pushed out or get canceled. So, I think the booking environment, while the revenue may be lower, the booking environment is now more predictable and more robust. So we can plan better a quarter.

Okay.

Yes.

If I just double click on OSP, should I assume that image sensor, what is being reflected in the guides for the September quarter, would that show any year-over-year growth?

3D sensing? Well, it's actually lower in revenue year-on-year because we have now going to the new ASP schedule. So, there's, you know, pricing roadmap, so the ASP is lower, the volumes are slightly the same, maybe a little higher. But the problem is the volume. Volume growth is not enough to offset the ASP erosion that we just went in effect for the next year.

Got it.

So, but one, you know and of course, it's still very much driven by a single customer which where we have a very high level of penetration of products. So, it's very much driven by their demand and volumes. One thing we are also noticing there that is positive, the demand is now being a little bit better linearized throughout the year. And I think it's mainly driven by contract manufacturers who don't want to be heavily overstressed in the September, December quarter, and then having a lot less demand in the March and June.

Sure.

And maybe I will let you know, it's about two and a half, sorry, maybe I just said it's about $2.5 million year-over-year for, you know, for the first quarter. So, it actually could be another dynamic of pricing, et cetera, that Oleg mentioned, but also, you know, we'll have to monitor the supply chain that Oleg just discussed, you know, and maybe it's kind of more linearized and, you know, over the course of two, three quarters, it will kind of offset itself.

Sure. Just for proof of modeling, the implied midpoint of your guide implies about a 9% sequential growth in OSP. Is that driven by both 3D sensing and counterfeit?

I believe the anti-counterfeiting business is beginning to recover. Many inventories have been used up. There is an increase in that area, and while 3D sensing shows higher numbers, it is necessary to account for some price erosion. You would likely see a total in the vicinity of $80 million from both segments, which are both experiencing improved demand and volume compared to the previous year.

Okay, thank you.

It's crucial for us to see a recovery in anti-counterfeiting because that's where a significant portion of our manufacturing assets are concentrated. Improving absorption driven by stronger demand in anti-counterfeiting will have a substantial positive effect on the operating margin of the OSP business unit.

Got it. Thank you.

Your next question comes from the line of Michael Genovese with Rosenblatt. Your line is open.

Great. Thanks. I just have one question, which is, you know, Oleg, you've spoken a lot about how AI and data center investment, you know, can improve or help field tests over time. I just wanted to kind of more directly connect the dot on how it could help field test. And so, you know, is the Lumen announcement about their investment in AI, is that key to the second half recovery or, you know, other things like that? Do we expect other service providers to announce something similar? I guess, there's a few questions in there, but if you could kind of run with those thoughts, I would appreciate it.

Well, sure. I think all of that is goodness, actually, those are all positive things. I mean, to be fair, I mean, Lumen, to give them credit, even when they were really beaten down in the last 12 months, they've actually been, you know, when I talk about a Tier 2 is being more aggressive, I think Lumen has been one of the more proactive and more innovative companies in that space in terms of how, what technology they deploy and how they roll out their value proposition. And I mean we like Lumen because they actually listen to a lot of good innovative ideas and they're one of the more innovative players in terms of implementing things that truly differentiate them from the, you know, run of the mill fiber operators.

I guess just any more maybe I guess you did touch on this a bit earlier, but any more color or comments, prediction on, you know, this AI investment, you know, creating more, whether it's optical or fiber, you know, whether it's optical kind of core or fiber access demand? So, that's why I zeroed in on Lumen there, because it seems like their AI investment will.

Yes, when I mentioned 1.6 terabits, traditionally the progression from 10-gig to 100-gig, then to 400-gig, and possibly 800-gig was primarily driven by network access manufacturers supplying service providers. The shift to 800-gig involved both service providers and data centers, but the move to 1.6 terabits is solely driven by data centers. We're observing that data centers are activating more fiber strands right from the start, compared to service providers, who typically lay down a fiber and then turn on additional strands over the years as needed. They just may be sitting dark, but they actually pay for connecting all the strands, so then as they need it, they turn them up quicker. And the reason they are doing it is the time between lighting up fiber and lighting up the next fiber, the time is much, much shorter, and they see their traffic grow much faster than the service provider. So, in that respect, I see them looking at the fiber interconnecting between their data centers are completely different than the service provider who would look for their metro and core network. And I view it as a positive for us because that's basically means much more frequent changes and need for a much faster responsiveness.

Your next question comes from the line of Karan Juvekar. Your line is open.

Hi. This is Karan Juvekar on for Meta. So, first question, just on the NSE side, I know you're sort of expecting a conservative spend environment throughout the calendar year. I guess, as you look into the first half of next year, where you expect some uptick, I guess, are you expecting sort of a step function recovery in revenues or a more gradual recovery? And I guess, just parsing out between Europe, European and US carriers, just any trends to be mindful in terms of how you're thinking about a recovery? I know North America is the most challenged today and how you expect the recovery there to play out?

When you mentioned service, are you referring to something like NE or NSE? No, I'm talking about the recovery being more of a gradual process rather than a sudden change. I see it as many small steps rather than a big leap, particularly driven by projects. Interestingly, Europe hasn't performed as poorly as expected. While there has been some slowdown, it's not nearly as severe as what we've witnessed in North America, which has been quite stagnant for the past two years. So, I think in terms of a step function, clearly, if AT&T will continue to proceed with their plans to accelerate and resume their fiber to the home, in a way, it will be a bit of a step function for the fiber instruments. And usually if somebody as big as AT&T restarts deployment, it sends a, you know, a shock through the industry, which means the cable guys are going to have to accelerate, the wireless may have to do something more because then it creates a nice competitive whirlwind that everybody needs to start responding. So, it generally, just as when they stop spending, everybody else stops spending. When they start spending, others are going to follow usually. I don't want to set unrealistic expectations for a sudden change; instead, I prefer a gradual recovery in the base demand. I see a significant acceleration in Fiber Lab production, and we believe that 1.6 terabits will be a key driver in the first half of next calendar year. As North America begins to recover, Europe is likely to follow closely behind, although Europe didn't decline as much as North America, so I anticipate a milder recovery there. Interestingly, we're observing more aggressive plans in Latin America, which is often expected to be last in this regard, but they are actually catching up. We're identifying some exciting opportunities, particularly for our AI OPS and other products from central and South America. NATO has remained fairly solid throughout this period.

Okay. That's very helpful. And then I know you mentioned earlier that sort of on the OSP side inventories are sort of depleted, but I just wanted to get a little bit more color on trends you're seeing there. What sort of drove the upside? Is it run inventory builds or new prints and just expectations on that moving forward? That would be helpful. Thank you.

You're talking about our internal inventories, right? Not the inventories of the service providers. Which inventories are you talking about? Karan Juvekar: Like the OSP side inventory. So, yes, you're right. Oleg Khaykin: OSP, yes. So, as I mentioned earlier, we are seeing some recovery in the anti-counterfeiting demand, and it's really driven. I mean, a lot of the inventory that was built up in the channel during COVID because they also ordered a lot of material and products to keep on hand. Finally, a lot of it has been wound down and consumed. So, the orders that are coming back is really more in line with the demand and consumption and less of the restocking or anything like that.

Okay, that's helpful. Thank you.

Sure. Thank you.

This concludes our Q&A portion of the call. I turn it back to Vibhuti for final comments.

Thank you, Emma. This concludes our earnings call for today. Thank you for joining, everyone. Have a good afternoon.

You may now disconnect.