Good afternoon, and thank you for standing by. Welcome to Western Digital's second quarter fiscal 2026 conference call. Presently, all participants are in listen-only mode. Later, we will conduct a question and answer session. At that time, if you would like to ask a question, you may press star, then 1 on your phone. As a reminder, this call is being recorded. Now, I will turn the call over to Mr. Ambrish Srivastava, Vice President, Investor Relations. You may begin.

Thank you, and good afternoon, everyone. Joining me today are Irving Tan, Western Digital's Chief Executive Officer, and Chris Senesal, Western Digital's Chief Financial Officer. Before we begin, please note that today's discussion will contain forward-looking statements based on management's current assumptions and expectations, which are subject to various risks and uncertainties. These forward-looking statements include expectations for our product portfolio, our business plans and performance, ongoing market trends, and our future financial results. We assume no obligation to update these statements. Please refer to our most recent annual report on Form 10-K and our other filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially from expectations. In our prepared remarks, our comments will be related to non-GAAP results on a continuing operations basis, unless stated otherwise. Reconciliations between the non-GAAP and comparable GAAP financial measures are included in the press release and other materials that are being posted in the Investor Relations section of our website at investor.wdc.com. Lastly, I want to note that when we refer to we, us, are, for similar terms, we are referring only to Western Digital as a company and not speaking on behalf of the industry. With that, I will now turn the call over to Irving for introductory remarks. Irving?

Thanks, Ambrish, and good afternoon, everyone, and thank you for joining us today. The growth and impact of AI continues to accelerate across numerous industries. As generative AI models become the norm and agentic AI scales to drive business productivity, it is clear that AI is becoming a true strategic enabler of business transformation. AI inference has also begun to take hold, in many ways becoming the true AI workload, with deployment to chatbots and virtual assistants and customer relationship management tools. Further innovations in physical AI are also accelerating quickly, generating increasingly larger multimodal models, propelled by advancements in autonomous vehicles and robotics. In all cases, it is data that is needed to fuel the entire AI process, from training to inference, to enable stronger models and sharper inference results. And as more data is generated and the value of data increases, the demand to store it is expanding at a rapid rate. As AI capabilities expand, cloud continues to grow as well, and both are driving the surge in demand for higher-density storage solutions. In this new era where AI and cloud dominate, Western Digital has taken a customer-focused approach to managing this strong demand by working closely with our hyperscale customers, ensuring that we deliver reliable, high-capacity drives at scale to give them the best performance and total cost of ownership. We are doing this by continuing to focus on increasing our drive's aerial density and accelerating our hammer and ePMR roadmaps, as well as upshifting our customers to accelerate adoption of higher capacity drives and ultra-SMR technology. This last quarter, we shipped over 3.5 million units of our latest generation ePMR products, offering up to 26TB CMR and 32TB Ultra-SMR capacities, representing strong confidence and adoption by our customers. We have also started qualification of our HAMMER and next-generation ePMR products, each with a different hyperscale customer. These drives will offer our customers the higher capacity and improve total cost of ownership that they are looking for. In addition, we continue to accelerate our hammer innovation. To support this, we recently acquired intellectual property, assets and talent that will help us in the development of our internal laser capabilities. Also this past quarter, in partnership with Software Ecosystem Partners, we announced our UltraSMR-enabled JBOD platforms, expanding UltraSMR adoption to a broader customer set. These platforms deliver significantly higher storage density compared to conventional drives, giving customers hyperscale-like performance and make mass-scale data analysis more sustainable and efficient. We are truly seeing our approach resonate with our customers, and this is reflected in longer-term agreements and better visibility into their requirements. We have firm purchase orders with our top seven customers through calendar year 2026. We also have in place robust commercial agreements with three of our top five customers, two through Calendia 2027 and one through Calendia 2028. These agreements indicate a strong trust that we have built for our customers and confidence in our ability to meet their Exabyte needs. We are hosting an Innovation Day on February 3rd in New York next week where we will share updated roadmaps for our HAMR and EPMR products, as well as further details on core innovations that we are developing to improve our drives, performance, energy efficiency and throughput. We will also provide an update on our financial model. In keeping with our strategy to incubate new growth factors based on our intellectual property and core capabilities, last month we announced a strategic investment in CoLab, which combines our expertise in material science and precision manufacturing with CoLab's breakthrough approach to quantum hardware design. Working with CoLab, we aim to advance next-generation nanofabrication processes that improve qubit performance, reliability, and scalability. Looking ahead, we see our positive momentum continuing and will remain focused on supporting our customers' exabyte storage requirements while completing qualifications and launching our next-generation HEMR and EPMR drives. I will now hand it over to Chris to share our Q2 results and outlook for Q3.

Thank you, Irving, and good afternoon, everyone. Western Digital delivered another quarter of strong financial performance, reflecting disciplined execution across our organization and our ability to meet the customer's growing demand in the AI-driven data economy. During the second quarter of fiscal 2026, revenue was $3 billion, up 25% year-over-year, driven by strong demand for our near-line drives. Earnings per share was $2.13. Both revenue and EPS were above the high end of the guidance range. We delivered 215 exabytes to our customers. up 22% year-over-year. This includes over 3.5 million drives, or 103 exabytes of our latest generation EPMR, with capacity points up to 32 terabytes. Cloud represented 89% of total revenue at 2.7 billion, up 28% year-over-year, driven by strong demand for our higher-capacity near-line product portfolio. Client represented 6% of total revenue, at $176 million, up 26% year-over-year. Consumer represented 5% of revenue at $168 million, down 3% year-over-year. Gross margin for the fiscal second quarter was 46.1%. Gross margin improved 770 basis points year-over-year and 220 basis points sequentially. The improved gross margin performance reflects continued makeshift towards higher capacity drives and tight cost control in our manufacturing sites and throughout the supply chain. Operating expenses were $372 million. As a percentage of revenue, operating expenses declined 120 basis points sequentially, primarily due to operating leverage in the model. Operating income was slightly above $1 billion, translating into an operating margin of 33.8%. Interest and other expenses were $45 million, and our effective tax rate in the fiscal second quarter was 15.1%. Taking into account the diluted share count of 378 million shares, EPS was $2.13, an increase of 78% year-over-year. Turning to the balance sheet, at the end of our fiscal second quarter, cash and cash equivalents were $2 billion, and total liquidity was $3.2 billion, including the undrawn revolver capacity. Debt outstanding was $4.7 billion, translating into a net debt position of $2.7 billion and a net leveraged EBITDA ratio of well below one turn Operating cash flow for the fiscal second quarter was $745 million and capital expenditures were $92 million resulting in strong free cash flow generation of $653 million for the quarter, which reflected a free cash flow margin of 21.6%. During the quarter, we made $48 million of dividend payments and increased our share repurchases to $615 million, repurchasing 3.8 million shares of common stock. Since the launch of our capital return program in the fourth quarter of fiscal 2025, we have returned $1.4 billion to our shareholders by way of share repurchases and dividend payments. Also, today we announced that our board has approved a quarterly cash dividend of $0.12.5 per share of the company's common stock, payable on March 18, 2026, to shareholders of record as of March 5, 2026. I will now turn to the outlook for the third quarter of fiscal 2026. We anticipate revenue to be $3.2 billion plus minus $100 million. At midpoint, this reflects a growth of approximately 40% year over year. Gross margin is expected to be between 47% and 48%. We expect operating expenses in the range of $380 million to $390 million. Interest and other expenses are anticipated to be approximately $50 million. The tax rate is expected to be approximately 16%. As a result, we expect diluted earnings per share to be $2.30 plus minus 15 based on a non-GAB-diluted share count of approximately 385 million shares. To wrap up, Western Digital achieved another strong quarter with performance ahead of expectations. Our guidance for the next quarter underscored continued favorable trends in our business alongside our disciplined approach to free cash flow, capital returns, and long-term value creation for shareholders. With that, let's now begin the Q&A. Amrish?

Thank you, Chris. Operator, you can now open the line to questions, please. To ensure that we hear from as many analysts as possible, please ask one question at a time. After we respond, we will give you an opportunity to ask one follow-up question.

Ladies and gentlemen, we will now begin the question and answer portion of today's call. you have a question please press star 1 on your phone if you would like to withdraw your question please press star 2 one moment please for the first

question our first question today comes from Aaron Rakers with Wells Fargo

please go ahead yeah thanks for taking the question and I will stick to one I'm brief um gross margin line the guidance that you're giving for 47 to 48%. I guess the back of the envelope math would suggest that you're maintaining what looks to be like a 70, maybe 75% incremental margin flow through. So I guess my question is, you know, how do you think about the durability of that incremental margin? Or maybe taken another way, how do you think about the cost curve down on a per terabyte basis as we look out over the next

call in several quarters? Thank you. Yes, Aaron, thanks for your question. And so first of all, I'm really happy with what's going on with the gross margin. We delivered 46.1% gross margin, up 220 basis points quarter over quarter, up 770 basis points year over year. And we are guiding to 47, 48%, so 47.5% at the midpoint, which is up 740 basis points on a year over year basis. And Aaron, I think your math is working. the incremental gross margin is on or about 75%, depending on how you look at it, on a year-over-year basis or quarter-over-quarter basis. So I've stated before I'm very comfortable with an incremental gross margin higher than 50%, and definitely 75% is higher than 50%. I mean, in gross margins, there's two sides to the equation. On one hand, you have pricing environment, and on the other hand, you have the cost environment. In pricing, I've talked about that before, we see a stable pricing environment with prices on a price per terabyte kind of flattish to slightly up. Actually, last quarter, it was up 2%, 3% on an ASP per terabyte basis. So that clearly demonstrates the value that we continue to deliver to our customers. And on the cost front, the teams continue to execute really well. We continue to upshift our customers to higher capacity drives, which gives us a cost benefit. And then there is great execution as well on driving down the cost in our manufacturing assets as well as throughout the supply chain. And when you look at it last quarter, the cost per terabyte was coming down on or about 10% on a year-over-year basis. And so when you put us all together, we continue to drive further gross margin expansion, and we believe in the next couple of quarters and beyond, we will continue to be able to do that.

Thank you. Thank you, Aaron. We'll go to the next question, please.

The next question is from Eric Woodring with Morgan Stanley. Please go ahead.

Great, guys. Thank you for taking my questions. Irving, just given the tightness of the HDD market and kind of the significant inflation that NAND is going through right now, can you maybe just talk about maybe your patience in being able to sign purchase orders further into calendar 27 to extract better economics, just relative to maybe how you were approaching signing POs last year? Is that making any difference in the economics you're able to extract? Thank you.

Yeah, thanks, Eric. As we highlighted, you know, we're pretty much sold out for Calendia 26. We have firm POs with our top seven customers. And we've also established LTAs with two of them for Calendia 27 and one of them for Calendia 28. Obviously, these LTAs have a combination of volume of exabytes and price. And in relation to pricing, I think first it's important to recognize that our customers actually see value that there's actually a structural shift in the value that we deliver to them, especially in the impact that we have to their total cost of ownership as the business moves more and more towards inference where monetization is happening. So in this case, the pricing that we've provided there reflects the value that we're delivering to them. And so as Chris mentioned, we continue to see going forward a stable pricing environment that gives us an opportunity to continue to extract more value as we deliver both better TCO value to our customers and to better support their supply-demand needs as well through higher-capacity drives.

Do you have a follow-up, Eric? Just very quickly, Chris, would just love to know how you're approaching the Sandisk share ownership. Do you still plan to monetize before, I think it's the February 21st deadline, and more importantly how do you expect to leverage those proceeds thanks so much guys best of luck yes

eric as you probably know we still have seven and a half million sandisk shares and it's our intention to monetize those shares before the one-year anniversary of the separation likely in a similar transaction that we have done before meaning it's a depth for equity swap and so the proceeds will be used to further reduce the debt thank you Eric next

question the next question is from CJ Muse with Cantor Fitzgerald please go

ahead yeah yeah thanks for taking the question I guess could could you speak to how customer engagement and contracts are evolving in this very tight

environment thanks so much yeah CJ this is having thanks for the question you know one of the things that we've been very focused on over the last year is really developed a much more customer-centric approach as we've shared. In the past, we've really pivoted our organization to be centered around our big hyperscale customers with dedicated teams for each of them. That's really deepened the relationship that we have with them in terms of both technology roadmap development, in terms of getting better visibility of their demand requirements. And you see the result of that in the longer-term LTAs we've been able to structure. With them, we're also looking forward to sharing with all of you the innovations that we are going to be delivering to support the AI needs, workloads needs going forward at our Innovation Day next week. But definitely the relationship has improved, as I highlighted. They definitely see the value that's resulting in the structural change that we're seeing in terms of pricing with them that's also resulting in the longer-term contracts that we have. Ultimately, what we want to do is to be able to ensure that the fair value exchange deliver predictable pricing to them, because one of the things that they are concerned about is the high volatility of some tiers of the storage space, right, and to ensure that there's sustainable value creation both for them and for us along the way.

Do you have a follow-up, CJ?

Oh, let's go to the next one. Oh, sorry, CJ, go ahead. Yeah, sorry about that, I guess just to follow on the Sandus share comment, can you talk about your plans thereafter? Are you going to focus more so on share repurchase or other?

Well, we're already focusing on share repurchases since we've announced the $2 billion share repurchase authorization in May of 2025. we already have repurchased 1.3, or we have used 1.3 billion of that program, repurchasing on or about 13 million shares, and there is no hesitation. We will continue to use that program. Thank you, CJ.

The next question is from Wamsi Mohan with Bank of America. Please go ahead.

Hi, this is Ashlyn Greninger on for Wamsi. Congrats on the results, guys. Just one question for me. Mine's on the mix of Ultra SMR. You know, just given your order book, LTAs, you know, how is this mixed trend on Ultra SMR trending, and how does this mix shift play a role kind of as a driver of gross margins moving forward?

Yeah, that's a really great question, Ashley. Thank you for that. Well, last quarter, we crossed on the near-lying portfolio 50% mix on Ultra SMR, and we actually see that increasing as we've highlighted one of the things that we're doing to better support the growth and demand from our customers is really to upshift them to higher capacity drives. A big part of that is the upshift to ultra-SMR-based drives, and we see more and more customers adopting ultra-SMR. We have our top three customers fully on board with ultra-SMR drives already today, and we have another two to three more that are moving into a process of adopting ultra-SMR, so we are likely to see the ultra-SMR mix of our total near-line exabyte base continue to increase going forward. That's actually very important for us because, one, we are better able to serve our customer demand needs. As you recall, ultra-SMR gives a 20% capacity uplift over CMR and a 10% capacity uplift over the industry standard SMR. But equally important from a gross margin standpoint, Ultra-SMR is a software-based solution, so it's very accretive for us from a margin standpoint as well. So a higher mix of Ultra-SMR is definitely going to be beneficial, both to our customers and to our ongoing profitability as well.

And, Ashley, one thing, in Irving's prepared remarks, we mentioned the JBOD that we have launched, which also expands our Ultra-SMR customer reach beyond what we have been targeting so far. So thanks for your question. We can go to the next question, please.

The next question is from Asia Merchant with Citigroup. Please go ahead.

Hi, good afternoon. It's Mike Cadiz at Citi for Asia today. So I have a question and perhaps a follow-up. So the first is, could you provide any color or additional color on yields and reliability? I know that is, those are a couple of points that Irving has brought up over the past couple of quarters in relation to the multiple rollouts. Is there any implication to cost-per-bit declines that we can think of?

Yeah, thanks for the question, Mike. So our yields on our EPMR products continue to be very, very – they continue to be yielding very well in the low 90s percentage yield range. And obviously, from a reliability and quality standpoint, we've received very good feedback from our customers. The fact that we've been able to, last quarter, deliver over 3.5 million units of our flagship ePMR drives is a testimony to the confidence that they have in terms of the reliability and the quality. In terms of the cost, related to the cost down, obviously, as we get yields up, cost continues to decline as the ultra-SMR mix goes up within those new products as well. That's also going to be a driver of cost down as well.

So can you talk more about any progress or the progress from your Rochester test and integration site? How you're leveraging perhaps those efforts to accelerate maybe the existing customer transitions?

You know, one update that we shared in the prepared script is actually last quarter we indicated that we would start HAMR qualification. We pulled it forward to the first half of Calendia 26. We actually have started qualification of those drives already this month for HAMR. On top of that, we've also started qualification for our next generation EPMR drives as well. And obviously, our Rochester SID Lab plays a critical role in ensuring that we have a very smooth, quick qualification. And equally important, as they move into production environments that they deliver the same reliability and quality that our customers have been used to our previous generations of products. Again, on this one, we look forward to sharing a lot more. On the 3rd of February, in our Innovation Day, we'll be highlighting the updated roadmaps for both our EPMR and HAMR portfolio. And so we look forward to sharing more of that exciting news next week. Thank you, Mike.

The next question is from Amit Daryanani with Evercore. Please go ahead.

Hi, this is Hannah on for Amit. I was just wondering, are there any notable investments related to Hammer that are currently flowing through COGS or operating expenses, and should we expect those costs to roll up or normalize as Hammer begins to ramp?

Yeah, we have been working on Hammer for the last 10 years, and the engineering teams are making good progress, So there is no change there. We will continue to work on those programs, and we will, in general, continue to innovate and make performance improvements to our programs, continue to drive higher-capacity drives, and those investments will continue. As it relates to the gross margin, we haven't started the hammer ramp yet, but we are confident once we start ramping HAMMER that it will be neutral to accretive to our gross margins.

Yeah, maybe just to add on to what Chris said, even with the HAMMER RAM that we anticipate will happen at the start of calendar year 27, our CAPEX as a percentage of revenue on a run rate basis will still be within the 4% to 6% range.

Did you have a follow-up?

No, thank you. Okay, thank you.

the next question is from Carl Ackerman with BNP Paribas please go ahead thank

you gentlemen rose mid-teens in 2025 and it's projected to advance double digits again at 2026 as agentic AI is supposed to drive a cyclical recovery and front end conventional servers but in your case because hard drive units are highly correlated to demand for conventional servers and you're also seeing a content uplift from these new drives, do you believe agentic AI demand can enable you to exceed your long-term exabyte growth carrier of low 20s? Thank you.

Thanks for the question, Carl. Well, I think we've definitely seen exabyte growth over the last few quarters in the low 20s, as you've highlighted. Actually, we see as the AI value changes from model training to inference, more data is going to get created as a result. In order to enable the inference delivery, more data needs to get stored as a result of that data getting generated as well. And if you look at the economics of being able to deliver inference at the right cost structure to drive mass-scale adoption, again, a lot of that data that's getting generated and requires storage will be stored on hard drives. as they are, as we've highlighted in the past, where hyperscalers really are masters of managing the economics and moving data across the different tiers of SSDs, HDDs, and tape as well. So from our perspective and the conversations that we've been having with our customers, inference is definitely going to drive a significant amount of data storage requirement, and that's really positive for HDDs going forward.

Do you have a follow-up, Carl?

If I may, Amrish, just going back to Hammer, it sounds like you've pulled in the progression of Hammer, at least your first primary customer. Can we talk about the interest beyond your initial customer, given the robust hyperscale or demand for exabyte capacity?

Yeah, thanks for the question, Carl. As we've mentioned, we are starting qualification in the first half of this year. We've already started that with one hyperscale. customer already this month and we will be initiating another one with initiating qualification with another hyperscale customer relatively soon Thank You Carl

The next question is from Thomas O'Malley with Barclays. Please go ahead

Hi guys, thanks for taking the question just to follow up on some of the the comments from the preamble about acquiring some IP I think on the laser side could you maybe give us a little more detail on that? maybe the size of the purchase, and then what in particular you needed to add on the laser side that you felt like you needed to go out and do a deal?

Yeah, thanks for the question. Well, unfortunately, the terms and conditions of the deal are confidential, so we can't really share too much about that. But we are excited about acquiring this technology. We'll share again more of that next week at our Innovation Day. But what I will say is it's definitely going to give us the benefit of taking much less real estate in the drive, right, And that will actually help with manufacturability in terms of reliability. And we also see that with this innovative technology, energy requirements to support the lasers will also be reduced compared to the conventional laser diode. So we're quite excited about both the IP and the capabilities that we've acquired.

Do you have a follow-up, Tom? I do. With NVIDIA's addition of the KVCache offload and the NAND attached that's thought to go with that, I was curious if you guys have been engaging with any large hyperscalers or any large procurers of storage for any kind of solution that would maybe attach on to custom silicon deployments, a.k.a. something that brings the hard drive a little bit closer to some of the accelerators, if there's a roadmap for those or if you're engaging in that way with any customers.

Yeah, no, thanks for the question. Again, I think the initiative that NVIDIA has been driving is really to help accelerate inference capability. And as I've highlighted, as a result of that, you know, the velocity and the volume of data is going to get generated much more rapidly. And the benefit from us, obviously, will be able to require, it will require a lot more storage, which obviously HDDs are well suited with the superior economics. We are working on, and we've highlighted in the prepared remarks, on interesting innovations to improve both our bandwidth and throughput of our drives. Again, something we're looking forward to be sharing with all of you next week as well. Thank you, Tom.

The next question is from Vijay Rakesh with Mizuho. Please go ahead.

Yeah, hi. Thanks, Irving and Chris. Pretty phenomenal numbers here. Just a quick question on the HAMR side. Are you expecting to pull in the HAMR roadmap, timeline given, you know, how tight supply is, et cetera?

Yeah, we've pulled in the qualification already by half a year. and we've started the qualification process with one customer. As I just mentioned earlier to Carl's question, we will be starting a qualification with a second customer imminently on qualification. Obviously, getting Hammer and higher-capacity drives to our customers are a key part of the approach that we're taking to meet the strong demand for exabytes from our customers on HCD. But it's also very important to remember we also have started the qualification of our next generation ePMR drives, and those products have shown the ability not to only deliver very high capacity per drive, but also to be able to support high degree of scalability and manufacturability where we are able to deliver large volumes of drives to our customers. So last quarter we delivered over 3.5 million drives, and this quarter we're looking to deliver close to 4 million drives.

And then on the gross margin trajectory, I guess, with the incremental 50% drop-through. When you look at HAMR ramps, any thoughts on how we should look at those margins? I guess you might call it on the Innovation Day, but any preliminary thoughts there?

Yeah, I mean, as we've consistently highlighted, we see the transition. Once HAMR gets to the same scale as our EPMR portfolio, the gross margins for HAMR will be neutral to accretive from what we have with EPMR.

Thank you, Vijay. The next question is from Stephen Fox with Fox Advisors. Please go ahead.

Hi. Good afternoon. I was wondering if you could maybe talk about the revenue per exabyte in the quarter compared to last quarter and a year ago, in the sense that how much of the change quarter over quarter and year over year is related to change in mix? And then I had a follow-up, if I could.

Yeah. Maybe I can start off here, and Chris might want to add in. And look, the big driver of our sort of revenue per exabyte both year-in-year and quarter-in-quarter is related to our cloud segment. So our big hyperscale customers, we see very strong demand from that segment. So obviously that's driving a lot of the bids and the revenues associated with that. And in that segment, as Chris has highlighted, the pricing is stable. So in fact, it was up single-digit last quarter and year-in-year as well. So that's a positive trend that we continue to see, and, you know, that's going to be a growth driver for the business for the year and probably for the next two years as well.

Thanks. And if I could just quickly follow up. Can you just – is there any commentary on how successful you were in terms of maybe getting out more exabytes during a quarter than originally planned for, or, you know, whether through quicker customer qualifications or your own efficiencies. Any update there would help.

Well, last quarter we delivered 215 exabytes, right? That was up 22% year in year. And, again, a lot of it's being driven by our cloud portfolio. As we've highlighted, we shipped over 3.5 million units of our current, you know, ePMR products that go up to 32 terabytes. So it's a clear recognition of the stability, quality, and scalability of that product. So we will continue to do that. And we look forward to ramping the next generation of EPMR and Hemery in the coming quarters to better support the customer demands. Thank you, Stephen.

The next question is from Ananda Barua with Loop Capital. Please go ahead.

Yeah, good afternoon, guys. Thanks for taking the question. On cost down, you mentioned that, I think, Chris, December quarter was 10% year-over-year down, and with Ultra SMR becoming a larger portion of the ship, and then with Hammer coming on sort of margin-neutral deposits, do you think that cost down – I think it's classically been about 10% year-over-year. Do you think that can increase in coming years, cost-out increasing per exabyte ship banks?

Yeah, so currently it's on about 10% cost per terabyte or exabyte reductions. Obviously, we will continue to innovate, continue to push to higher capacity drives, continue to upshift our customers to adoption of those higher-capacity drives, including ultra-SMR. And all of those actions will lead to further cost reductions on a cost per terabyte. I think it's fair to say that on or about 10% is a good number. And as we potentially accelerate our roadmaps, we could potentially drive that higher.

That's super helpful.

Do you have a follow-up, Anand?

Yeah, quick, quick, Anand, thanks. This may be one for next week, actually, but just interested in understanding how far up the aerial density stack you think you can get CMR and ultra-SMR, you know, before you really get Hammer going. Thanks.

Yeah, I think that's something we are looking very much forward to sharing with you next week. So we look forward to seeing you there.

Go to the next question, please. Thank you, Anand.

The last question is from Krish Sankar with TD Cowan. Please go ahead.

Hey, guys. This is Eddie for Krish. You mentioned you had three LTAs for 2027 and 2028 that are volume, not price-based. I do wonder what is the reason these contracts are not locked in price, especially given the very tight supply? Is it the customer who prefer not to lock in price, or is it you guys who prefer to have the flexibility? Any high-level color would be helpful. Thank you.

Yeah, thanks for the question. Just to clarify, we have two customers that have LTAs through Calendia 27. One customer that has an LTA through Calendia 28. These LTAs have both price and volume conditions in them.

Okay, noted. Thank you. That's a great call. Thank you.

Thank you. Thank you, Eddie.

This concludes today's conference call. Thank you for joining. You may now disconnect.