Cirrus Logic, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic first quarter fiscal year 2024 financial results Q&A session. At this time, all participants are in listen-only mode. After a brief statement, we will open up the call for questions from analysts. Instructions for Q&A will be provided at that time. As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the conference call over to Ms. Chelsea Heffernan, Vice President of Investor Relations. Ms. Heffernan, you may begin.

Thank you and good afternoon. Joining me on today's call is John Forsythe, Cirrus Logix Chief Executive Officer and Venk Nathamuni Chief Financial Officer. Today at approximately 4 p.m. Eastern Time, we announced our financial results for the first quarter fiscal year 2024. The shareholder letter discussing our financial results, the earnings press release, and the webcast of this Q&A session are all available at the company's investor relations website. This call will feature questions from analysts covering our company. Additionally, the results and guidance we will discuss on this call will include non-GAAP financial measures that exclude certain items. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in our earnings release and are all available on the company's investor relations website. Please note that during this session, we may make projections and other forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially from projections. By providing this information, the company expressly disclaims any obligation to update or revise any projections or forward-looking statements, whether as a result of new developments or otherwise. Please refer to the press release and the shareholder letter issued today, which are available on the CirrusLogic website, and the latest Form 10-K, as well as other corporate filings registered with the Securities and Exchange Commission. For additional discussion of risk factors, that could cause actual results to differ materially from current expectations. Now I'd like to turn the call over to John.

Thank you, Chelsea, and thank you, everyone, for joining today's call. As you've seen in the press release, in the first quarter of fiscal year 2024, Cirrus Logic delivered revenue of $317 million towards the top end of our guidance for the quarter, driven by products, shipping, and smartphones. In a moment, Venk will discuss the results in greater detail, but before we get onto that, I'd like to provide some color on how we're doing against the strategy that I've outlined on previous calls. The first pillar of that strategy is to maintain and build our leadership in smartphone audio. And to that end, this quarter we taped out our next generation custom boosted amplifier, a component that we believe will deliver significantly increased performance and value to our customer, and which we anticipate will ship next calendar year. We also completed product validation of our first 22 nanometer smart codec, a new product which is also on track for introduction next year. This new codec represents a significant technology transition for Cirrus Logic, and again, will deliver meaningful feature and performance benefits to our end customer. In our general market smartphone business, we also secured several next generation Android sockets. And as a consequence, we anticipate seeing many great smartphone products featuring Cirrus Logic audio and haptics being launched in the market in the coming year. Moving on to the second pillar of our strategy, we're excited about the opportunities we see to continue to grow our high-performance mixed signal content in smartphones. The camera is a marquee feature of every major smartphone launch. We're proud of the progress that we've made in this area since we introduced our first camera controller product in calendar 2020. We're currently ramping production of our latest camera controller product for a smartphone that is expected to be introduced later this year. And looking forward, we believe there's still significant potential to continue to grow value in this area. And we're today investing in a roadmap of further products and features in pursuit of that goal. Beyond the camera, we've also previously indicated that we believe advanced power and battery-related technologies represent great opportunities for the company. And today we have a number of R&D programs underway related to high efficiency charging, battery management, and system side power delivery. We believe that the investments we are making in this space today will continue to drive product diversification and revenue growth in the future. Turning to our third strategic vector, we're increasingly leveraging our strengths in audio and high performance mixed signal to diversify into additional applications and markets. Most recently, we have focused on expanding into the laptop market, where we see significant greenfield opportunity for the company in the coming years. Today, we have well-established relationships with the top five laptop OEMs, who together account for a significant majority of all laptop unit volumes, and we are shipping content with each of them. While we're still in the early stages of our entry into this market, we already see significant customer demand and engagement around our amplifier and codec products that have been specifically optimized for laptops. And we expect end devices incorporating these new components to come to market in the next 12 months. During the June quarter, we also secured our first business laptop win with our new amplifier, highlighting the growing importance of audio quality in this key segment. And we anticipate this device will begin shipping next year. Additionally, we're delighted that both our new amplifiers and codec have been selected as part of the Soundwire compatible reference design from Intel, which will accelerate time to market and enable adoption of our components across more OEM platforms. Beyond the laptop market, we also continue to invest in further products and customer engagements that we anticipate will expand both our revenue and market diversity in the long term. These include gaming, augmented and virtual reality, automotive, industrial, and professional audio applications. The latter illustrated by our recent launch of a range of industry-leading professional audio ADC products. We're excited about the number of ways in which we believe we can leverage our outstanding engineering talent and best-in-class intellectual property to grow our business in these areas and beyond. Finally, I would like to discuss briefly the difficult decision we took in July, resulting in a workforce reduction of approximately 5% of our global employee base. This action was taken in order to better align our overall cost structure with our revised revenue expectations, in light of both a previously discussed change in customer plans regarding an HPMS product that we had been expecting to be introduced this fall, and the current general market softness. We remain committed to disciplined execution of our strategy and believe that following this action, we are well positioned to invest in many opportunities we see to drive future growth. And with that, let me now turn the call over to Venk to provide an overview of our financial results for our fiscal Q1 2024, as well as guidance for the second quarter.

Thank you, John. Good afternoon, everyone. I'll start with a summary of the fiscal first quarter results and then provide guidance for fiscal Q2. Fiscal first quarter revenue was $317 million, which was close to the top end of our guidance range, as unit volumes were higher than expected. Revenue was down 15% quarter over quarter and down 19% from a year ago due to lower volume of components shipping into the smartphone end market and, to a lesser extent, continued weakness in general market sales. Turning to gross margin, Non-GAAP gross profit in the quarter was $159.7 million, and non-GAAP gross margin was 50.4%, which was slightly above the midpoint of the guidance range we had provided. On a sequential basis, gross margin increased slightly, while on a year-over-year basis, gross margin declined by 110 basis points due to higher inventory reserves and a less favorable product mix. I'd like to provide an update on the high-performance mixed signal product that John alluded to earlier. As we mentioned in the shareholder letter, we've removed the revenue associated with this component from our internal model. But during the quarter, we made good progress with both our customer and foundry partner on the disposition of wafers associated with this product. And we do not anticipate the disposition to have a material financial impact. I'd also like to reiterate that our customer relationship remains strong as we continue to collaborate on a range of technologies and programs and pursue opportunities for both the next generation of existing components as well as new products. Turning to OPEX, non-GAAP operating expenses in the quarter were $113.8 million, down $6 million sequentially. I'd note that operating expenses came in below the low end of our guidance range due to product development prioritization as well as controls on discretionary spending. Restructuring costs associated with the cost actions John referred to earlier are not expected to be material and are reflected in the Q2 fiscal 24 GAAP operating expense guidance. I'd note that we're continuing to invest in products and technologies in order to pursue opportunities to drive a long-term revenue growth. And overall, non-GAAP operating income was $45.8 million in the first quarter, or 14.5% of revenue. And lastly, on the P&L, non-GAAP net income in the first quarter was $38 million, or 67 cents per share, as the higher than expected revenue and the lower operating expense flowed through to the bottom line. Let me now turn to the balance sheet. Our balance sheet continues to remain strong, and we ended the first quarter of fiscal 24 with approximately $426 million in cash and cash equivalents. Our ending cash balance was down $91.1 million from the prior quarter as we built inventory to support seasonal product launches in the second half of the calendar year and also used cash to repurchase stock during the quarter. Specifically, cash used in operations was $39.8 million during the June quarter, which is about 13% of revenue. We continue to have no debt outstanding, and also we have $300 million undrawn on our revolver. Now turning to inventory, as we indicated in prior quarters, We've been building inventory to support seasonal product launches in the second half of the calendar year and fulfill our way-for-purchase commitments for our long-term capacity agreement with Global Foundries. As a result, inventory was $301 million, up from $233.5 million sequentially, and days of inventory was approximately 175 days in Q1, up 60 days sequentially. Let me add some additional color on our Global Foundries Agreement. While a portion of the capacity associated with this agreement was originally intended to support our new HPMS component, the agreement allows for wafer allocation flexibility within our product portfolio. As a result, these wafers are being reallocated to other products that use the same underlying 55 nanometer high voltage process technology including amplifiers, haptic drivers, and battery and power ICs. Looking ahead, in Q2 fiscal 24, we expect inventory dollars to increase from the prior quarter. However, days of inventory are expected to decline due to seasonal product ramps. While we anticipate increased inventory levels of these other products during this fiscal year, we expect Q2 to be the high point of inventory for the remainder of the fiscal year. Turning now to cash flow, cash used in operations was $39.8 million in the June quarter, and CapEx was roughly $12.3 million, resulting in free cash flow for the quarter of minus 16%. For the 12-month period ending in the June quarter, free cash flow margin was roughly 10%. On the share buyback front, in Q1, we utilized $38.5 million to repurchase approximately 466,000 shares of our common stock at an average price of $82.59. As of the end of Q1 fiscal 24, we had $462.6 million remaining in our shared repurchase authorization. We expect to continue to return capital in the form of stock repurchases, which we believe will provide a long-term benefit to shareholders going forward. And now on to the guidance. For Q2 of fiscal 24, we expect revenue in the range of $430 million to $490 million. We expect gross margin to range from 49% to 51%. Non-GAAP operating expense is expected to be up sequentially in the range of $114 million to $120 million as higher variable compensation and product development cost is partially offset by lower employee expense. We will continue to control discretionary spending, but invest strategically in product development to drive long-term growth. On the tax front, as we previously discussed, our fiscal 2024 non-GAAP effective tax rate will continue to be unfavorably impacted by capitalized R&D expense, and as expected, our foreign tax credits will be lower this year. Our fiscal 2024 non-GAAP tax rate is expected to be approximately 24% to 26%, consistent with our prior quarter's guidance. We continue to anticipate that the impact of capitalized R&D will become less unfavorable over time as additional years of R&D expenses are amortized for tax purposes. We're closely monitoring legislation recently introduced that would restore immediate tax deductions for R&D investments if passed. In closing, we had a solid Q1 fiscal 24 as we executed well to deliver these results. Going forward, we will continue to focus on the best opportunities to enable the company to grow both revenue and profitability over the long term. And before we begin the Q&A, I'd like to note that fiscal year 2024 is a 53-week fiscal year and will include 14 weeks in the fiscal third quarter. And finally, while we understand there is intense interest related to our largest customer, in accordance with Cirrus Logic company policy, we will not discuss specifics about our business relationship. With that, let me now turn the call to Chelsea to start the Q&A session.

Thanks, Fink. We will now start the Q&A portion of the earnings call. Please limit yourself to a single question and one follow-up. Operator, we're ready to take questions.

At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Matt Ramsey with TD Cowan. Your line is now open.

Thank you very much, guys. Good afternoon. John, I guess for both of you guys, I wanted to ask a couple of questions around the resolution of the HPMS product that didn't ramp with a large customer. So you guys talked about a couple of different things, one of which is sort of the resolution on the wafers that were built. If you could give a little bit more color on that, if you're able to at all. And I guess, Fink, are those wafers... um still included in your inventory balance that you talked about um and then the second question on that topic is john this is kind of a longer term one and conversations over the years with yourself and with your predecessor jason it's always been really really hard to find mixed signal analog audio engineers and i know it was a a rough go not of your own fault at all that that things happen with that product but i just kind of wondered the decision to

take the workforce reduction rather than um just given the scarcity value of that engineering talent um maybe reallocating that folk those folks and so maybe you could talk a little bit about that thank you yeah thank you matt i'll i'll speak to that and then hand over to bank and he can he can talk about how we've been working through the uh uh the uh dispositioning of the work in progress around the around the product. Yeah, first of all, obviously, that was not a decision that we took lightly at all, but the reality is there's a significant change to immediate near-term revenue expectations there, and we wanted to work very hard to bring the cost structure more into line with that reality, whilst still ensuring that we were in a position to invest in all the things that we believe will drive us forwards as a company in the mid to long term. And I'd emphasize the latter point because we do have very many areas of opportunity across those three pillars of the strategy. And our plan is to continue to invest in that growth. So although this action was kind of distributed across the business, we will in fact exit this quarter with more people working in design than we had a year ago. So this is, you know, we had to take some steps to navigate the short-term challenges while at the same time ensuring that we're positioned for execution on the opportunities that we believe are going to help us grow and diversify in the medium and long-term.

Yeah, and thanks, Matt, for the question. This is Venk. So I wanted to address your question about the inventory related to the part that's no longer expected to ship. So the first point I want to make is that we do not expect a material financial impact, as I mentioned in the prepared remarks. The inventory is in different levels. Basically, at the high level, I want to mention that we've made really good progress with both our customer as well as our foundry partner on the disposition. And clearly, this is factored into our current guidance. Now, one thing to keep in mind is that as we talked about the global foundry contract, we do have some flexibility in terms of how we allocate the the capacity that we have across the different products. And suffice it to say that we have factored that into our guidance, and there's no material financial impact of the inventory for the component that's no longer in condition.

Your next question comes from the line of Tori Sevenberg. for Stifle. You may now go ahead.

Yes, thank you. If I could just follow up on that last topic, so your inventory is 175. I mean, I know there's a lot of things that go into inventory, but what would that number perhaps have been without the issues with the HPMS product, just roughly?

Yeah, thanks for the question, Tori. So a couple of things on the overall inventory that we talked about is A lot of it is driven by the fact that we are building ahead of the traditional launch of our key customers' products that happens in the second half of the year. That's the vast majority of it. And obviously, we also have a commitment to our foundry supplier in terms of fulfilling wafer starts and such. Without going into the specifics of what the split is, I can tell you that it's a relatively small number, and clearly we're in discussions with both our customer as well as with our foundry supplier. And as I said before, we do expect our inventory days to come down next quarter, and we have taken into account whatever is the inventory associated with that particular product.

That's very helpful. And for John, John, I know you don't. I mean, you can't pre-announce your customers' products, obviously, but can you just give us some puts and takes right now on content growth for the second half and next year? I mean, second half, it sounds like it's mainly new camera-controlled products, but how should we think about possible opportunities for 2024?

Yeah, sure, Tarek. So going into the cycle this fall, yes, the content growth that I've alluded to previously is in the camera controller area. So we have a new product ramping then. As we turn to next calendar year in 2024, we've got two significant products coming to market in our new audio components, the boosted amplifier and the codec. both of which we believe deliver meaningfully more value to the customer. So we're on track with those and are very excited about those and their potential impact. As we look beyond that, we believe there are multiple opportunities to continue to grow in the camera space, but also expand in other HPMS areas. In particular, I've alluded to power and areas around the battery where we believe there's still further opportunity for us to grow.

Your next question comes from the line of Christopher Rowland from Susquehanna.

Your line is now open.

Hi, guys. Thanks for the question. I guess my first question is you guys did mention some upside in revenue due to better units. And also, you guys had a nice guide as well. As we look out beyond September, and I know you guys don't guide, but is there anything we should think about in terms of shipment pull-in versus a typical cycle that you guys have out there? And these high DOIs and build-aheads, for example, does that also, even when you make an adjustment for the HPMS part and wafer supply commitments, Do these high DOIs also tell us about something beyond September as well? Thanks.

Chris, I'll make a comment here and then hand over to Venk to provide an additional color if he wants. Obviously, we don't guide beyond the quarter. The additional bit of color that I would add is that when we look at the backlog today and the movement there, it's pretty robust and stable. we haven't seen a lot of really any signs of the kind of stuff that you're alluding to. So it's pretty steady as she goes.

Yeah, and I'll reiterate what John said. As we look at the bookings patterns throughout the quarter, nothing unusual. And, you know, obviously we have the business with a top customer, but also the rest of the business we've seen no changes in terms of order cancellations or push-outs and pull-ins and so forth. Obviously, we're only guiding one quarter of the time, but so far what we've seen doesn't give us any reason to believe that there's anything unusual. Number one, and then the second question, because you asked about in terms of the inventory. Again, I want to reiterate the point that for the prior couple of years, we were pretty much in a hand-to-mouth existence as it relates to inventory, and obviously, days were incredibly low. So we have been talking for the last couple of quarters about building that inventory so that we can service our customers more promptly. And that's what we are down the path of executing. And also reiterate the point that while the inventory days are up this quarter, we do expect it to decline in the next quarter.

Thank you, Bank. And then secondly, on your wafer commitments, how are you guys feeling about the $560 million in 24 and the $380 million in 25 yet to come? And, you know, you'll have less flexibility probably because of those high DOIs. Does that come into play here or not?

Yeah, good question. So clearly from the long-term commitment standpoint, we feel good about where we are with the supplier. We are working very collaboratively with them in terms of trying to figure out how do we make use of those parts and repurpose them for the ones that we see demand going forward. And longer term, we still see a lot of opportunity in terms of being able to work with this supplier and then obviously, you know, continue to look for other sources of supply over time because we do see the runway ahead over the last, over the next several years in terms of the increased content and the new capabilities that we're working on.

At this time, I would like to remind everyone in order to ask a question, press star

then the number one on your telephone keypad.

We can take the next question.

The next question comes from the lineup, Ananda from Loop Capital. You may now go ahead.

Hey, good afternoon, guys, and thanks for taking the question. Yeah, two quick ones, if I could. Guys, just sort of with regards to the go-forward opportunity that you talked about, both with regards to advanced power and battery capabilities, is philosophically as smartphones, if smartphones were to begin to adopt, you know, kind of more robust AI features and functionality, and even if AR and VR, more robust AR and VR features in smartphones, were to work their way in, you know, in the coming years, would that create a need for a noticeable step up in advanced power and battery capability that you guys provide? And then I have just a quick follow up.

Yeah, thanks. That's an interesting question. I guess I'll probably be veering into a kind of speculative domain here. Yeah, two things would be potentially favorable to us. One is that where we really specialize is in the interface between the physical world and the digital domain. So anything where a lot of data needs to cross that boundary at very low power and be subject to some kind of processing, then we're really ideal for solving problems in that space. That's why You know, we've done so well traditionally in the boundary around audio and more recently in the camera and optical space. And I think in general, you know, AI, augmented reality and so on certainly drive use cases which look like that. So I think that presents opportunity for us to grab. And then Since you asked about the power space, I think one thing that's very obvious with anything related to AI is that it is very power-hungry, causes major spikes in power demand within any system. And that's exactly the kind of thing where even already our power conversion and control, I see it really delivers a lot of benefits to the system. to the end user and to our customer in terms of battery protection, in terms of managing the system, the power across the system and so on. So, yes, I think that would probably accentuate some of the kinds of problems that we're really experts at solving.

Yeah, that's awesome. I appreciate that context. And the quick follow-up is the context that you were giving just around, you know, sort of – I know you're not talking specifically about, given December quarter guidance, you're just talking about the backlog looking stable and steady as she goes. Is that also to say, if we just look at what your classic seasonality might be, that's not an awful place to start for our modeling purposes?

I think so.

I'll caveat it because When we get into this part of the year, of course, around any quarter boundary, there's a lot of material on either side of that. So it doesn't take much movement to move the needle a fair amount. But if you look at the shape of the quarter we're guiding now relative to the last quarter, that is... and then compare it against the last six or seven years in terms of seasonality, it's straight down the middle of the fairway. So, again, it kind of looks pretty normal to us.

Your next question comes from the line of Blaine Curtis with Barclays. Your line is now open.

Hey, thanks for taking my questions, Ed, too. I just want to ask you, and it might be a tough one to answer, so answer as you can, but to the product they got, I'm just kind of curious if you can speak to, I guess, the why part. And I guess I asked because I'm wondering if you can speak to kind of what's the status of it? I mean, as the customer, but they're never going to use it, kind of who owns the chip? Is there any IP that you spent a lot of time on this development, I'm assuming, and cost? So I think you spoke to maybe getting some reconciliation on the, you know, the wafers and the cost of, like, product that was made. I'm kind of curious. as to either recouping your efforts or monetizing it later? Anything you can speak to as to the future of that product?

Yeah, I'm not going to go through the details as we understand them of what lay behind the decision. I did point out in the previous call we were certainly happy that we hit our milestones, but obviously there were other factors involved. Regarding expectations going forward for it, pair the comment in the prepared remarks. We've taken it out of the model, which means that we don't have any expectations around it. That's not to say it mightn't come back. There is some very cool technology in there, so we would obviously love that. And it's also not to imply that we're saying something about the actual plan that the customer has because we're not and we don't have insight into that. But it's just to say that we really don't have line of sight of the plan for it right now, so it remains on the shelf. But yeah, there's a lot of great IP there that we would really like to find a way to get it to see the light of day.

Great. And then just back on the workforce reduction, I was just kind of curious the timing of that. Obviously, OpEx is up in September, and then you have the 14-week quarter in December. I'm just kind of wondering, you know, how to think about OpEx for December and when you get the full impact of the reduction, does that offset some of the kind of the mechanics of the extra week?

Yeah, Brad, thanks for the question. Yeah, so clearly, you know, from a guidance perspective, we're giving guidance only for the September quarter, but I understand your point. So essentially, in terms of the timing, you know, the effect of the The actions that we took will obviously only be valid for about six and a half to seven months of the full fiscal year. And so that's the way to think about it. And we announced in the 8K that it was roughly 4% to 5% reduction. So if you just do the math, it'll work out to somewhere around the 4% to 5%. spread out over the next several months, right? So I think that's the way to think about it. You know, in terms of the December quarter, clearly, you're not going to see any benefit on the revenue side, but on the OPEX side, the extra week will definitely have an impact on OPEX, and that's the way you should model it as well.

Your next question comes from the line of Matt Ramsey with TV Cohen.

Your line is now open.

Hey, guys. Thanks for letting me jump back in. John, you've been having increased commentary about the laptop market. And your large customer is a big player there. But you talked tonight about getting in some reference design programs at Intel. Maybe you could expand on that a little bit, the status of that relationship, how immediate that might translate into revenue, and just your understanding of the size of the unit opportunity that might be covered under those reference design programs at that customer. Thanks.

Yeah, thank you, Matt. I guess I'll talk about the PC opportunity on a couple of axes. So one is just the timing of our expectations of how our market penetration and revenue potential looks. And then I'll talk about the the stack of content that we believe is going to be relevant and form a part of our SAM there. So we're in the early innings. We've just sampled the codec and amplifiers to customers. We've just announced the inclusion of those on the reference design. Typically, those reference designs will be made available to OEMs between 18 and 24 months before you see end products in the market. So we're, you know, we've still got some way to go for that to grow significantly, but we also have a number of designs, a pretty significant number of designs on the way today which predate that reference design. So I think the way to think about it is that we will see Some products coming out late FY24 that include those new devices from us, but the total revenue in FY24 is going to be fairly limited. Then growing somewhat in 25 and then continuing to grow and become more and more meaningful through FY26 and beyond. And the SAM that we see is going to be made up of audio and HPMS products. So if you look at designs which are underway today, we have at least one design underway where we can see multiple amplifiers, a codec, and a haptics driver, which starts to become a pretty meaningful stack of content, obviously. And then over time, we expect power products from us to be layered on top of that. And we can also see potential in some products for multiple dollars' worth of power content. So, if you look out to 2027, we think there's about $1.2 billion of SAM when you take both the audio products and the HPMS power-related products into account.

So, thank you for all that detail, John. Appreciate it.

Yeah.

This will be our last question.

Next question comes from the line of Tori Sandberg from Stifle. Your line is now open.

Yes, thanks. I just had a follow-up to that last topic because, I mean, this is obviously part of your third strategy. Will you start to break out how much Notebook is as a percentage of revenue? And if so, I mean, would like 10% number or something like that be used? Because obviously we want to track your progress there and Just wondering numerically if you would share some of that with us.

Yeah, great question. So as John just mentioned, we're pretty excited about the opportunity that we see in front of us, especially in the PC market across multiple dimensions, codecs and amplifiers and such. You know, clearly, from a short-term perspective, everybody knows that the PC market is going through some tough times. But over time, we do expect these assignments to transfer – to translate into meaningful revenue. And at the appropriate time, we will consider that. And, yeah, watch this space.

Sounds good.

Thank you.

Thanks for the question.

With that, we will end the Q&A session, and I will now turn the call back to John for final remarks.

Thanks, Chelsea. So in summary, CirrusLogic delivered revenue towards the top end of our guidance for the first quarter and made great progress across our core areas of strategic focus. The first of which is maintaining our leadership in smartphone audio. Secondly, continuing to expand our high-performance mixed signal content in smartphones. And thirdly, leveraging our outstanding audio and high-performance mixed signal expertise to diversify into new markets. We're excited about the opportunities in front of us, and we thank you for your continued interest in CirrusLogic. I'd also like to thank all of our employees for their incredible dedication and commitment. Before we close, I'd also like to note that we will be participating in the KeyBank conference in Vail on August the 7th. Please check our investor website for the details. Thank you all for joining the call today.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.