Qorvo, Inc.

Good day, and welcome to the Corvo, Inc. first quarter 2025 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Douglas Delito, Vice President of Investor Relations. Please go ahead.

Thanks very much. Hello, everyone, and welcome to Corvo's fiscal 2025 first quarter earnings call. This call will include forward-looking statements that involve risk factors that could cause our actual results to differ materially from management's current expectations. We encourage you to review the safe harbor statement contained in the earnings release published today and as well as the risk factors associated with our business in our annual report on Form 10-K filed with the SEC, because these risk factors may affect our operations and financial results. In today's release and on today's call, we provide both GAAP and non-GAAP financial results. We provide this supplemental information to enable investors to perform additional comparisons of operating results and to analyze financial performance without the impact of certain non-cash expenses or other items that may obscure trends in our underlying performance. During our call, our comments and comparisons to income statement items will be based primarily on non-GAAP results. For complete reconciliation of GAAP to non-GAAP financial measures, please refer to our earnings release issued earlier today, available on our investor relations website at ir.corbo.com under financial releases. Joining us today are Bob Rugworth, President and CEO, Grant Brown, CFO, Dave Fullwood, Senior Vice President of Sales and Marketing, and other members of Orgo's management team. And with that, I'll turn the call over to Bob.

Thanks, Doug, and welcome everyone to our call. I want to begin by thanking everyone who attended our Investor Day, both in person and online. We appreciated the opportunity to share with you our strategic positioning and our enthusiasm for the future. The investor slides and a replay of the webcast are available on our IR website under Events and Presentations. Some of the investor feedback we've received is that it would be helpful to discuss our business by end market. We highlighted our end markets in our Investor Day presentation, and our formal remarks today will also highlight our opportunities and achievements by end market. Corvo's six primary end markets are automotive, consumer, defense and aerospace, industrial and enterprise, infrastructure, and mobile. They are underpinned by global megatrends, including electrification, connectivity, mobility, sustainability, datafication, and AI. These trends support new applications and new user experiences that are made accessible to end users by customers we serve and the products we enable. Our markets are characterized by multi-year upgrade cycles, 5G advanced, non-terrestrial networks, Wi-Fi 6 and 7, DOCSIS 4.0, Matter, Ultra Wideband, and others. They are also undergoing technology upgrades, such as AESA radars, advanced power management, RF MEMS, and highly integrated system-level solutions. And they are seeing upgrades in the user experience, like indoor navigation and force-sensing touch sensors. There are also continuous drivers that are common across markets. These include the continuously increasing requirements for bandwidth, speed, and latency, a sharp focus on power efficiency and power management, and the need for system-level solutions and greater functional density. Customers demand improvements in performance, whether it's in measured and power out, current consume, talk time, or battery life. They require higher levels of performance with greater efficiency and a reduced form factor to create the differentiation that drives their position in the markets they serve. Corvo is critical in enabling these capabilities. Now turning to quarterly highlights. In the automotive market, we were selected to supply V2X FEMS for a leading China-based automotive V2X reference chipset platform set to ramp at multiple automotive OEMs in calendar 25. To expand automotive engagements, we are leveraging our ultra-wideband portfolio across a range of applications, including secure access, digital key, kick sensors, child presence detection, and detection of intrusion. We are also expanding our opportunities in EVs to include solid-state circuit breakers. Given the smaller size, enhance reliability, and better thermals of our silicon carbide solutions, we enable solid state circuit breakers that can disconnect electrical overloads in case of failure to maintain safe and efficient power distribution. For consumer markets, we secured a new engagement to supply switch mode DC to DC charger for a wearable accessory for an Android OEM. We continue to expand our power management portfolio And we are engaged to supply our newest battery management solution for power tools, scooters, e-bikes, and other consumer products. We are also supporting a range of applications with our Matter and Ultra Wideband technologies, including door locks, smart lighting, and indoor navigation. We are combining Matter with Ultra Wideband to support the emerging Alero standard for controlling digital access to smart homes and offices. To support global broadband deployments, Corvo's Wi-Fi solutions enable cellular, cable, and satellite backhaul applications in developed and emerging markets. Of note, we recently surpassed 75 million Wi-Fi 6 SPAMs shipped into the India Wi-Fi market. We continue to expand our Wi-Fi portfolio, and we are seeing increasing customer interest in our two, five, and six gigahertz ball filters for Wi-Fi CPE applications. In other consumer applications, we are expanding our customer engagements with force sensing touch sensors, primarily for laptop trackpads, as well as other consumer applications. Turning to defense and aerospace, we secure design wins across segments, including AESA radars, large defense programs, and SATCOM deployments, where Corvo participates in both the low Earth orbit satellite and the ground-based consumer terminal. In DNA markets, Corvo is the beneficiary of underlying drivers, including the trend of one-to-many, the transition of mechanical systems to active electronic scanning systems, increasing system-level functionality, and size constraints requiring advanced multi-chip packaging. During the quarter, we fully integrated the Enoki Wave team into Corvo. Our added capabilities in silicon beam forming ICs and IF to RF conversion are complementary to our transmit and receive RF front ends, as well as our power management IC portfolio. We're developing more highly integrated placements that combine our capabilities to bring greater value add to our customers. New product launches during the quarter included three new highly integrated RF multi-chip modules for X-band, S-band, and L-band advanced radar applications. The new modules integrate filters, switches, and amplifiers to simplify design and enable the superior performance, low noise, reduced power consumption, and smaller form factor required for phased array and multifunction radar systems. For infrastructure markets, we launched a single-chip inverse cable equalizer that is programmable in the field and electronically simulates signal loss at various cable lengths. For operators, this eliminates the additional parts and tech time required to accommodate short runs during DOCSIS 4.0 field installations. Our single-chip solution also features a switched bypass mode that allows operators to utilize our solution in every line amplifier and field extender, regardless of distance. For massive MIMO 5G base stations, we introduced a best-in-class transmit pre-driver. It is engineered specifically for 32-node massive MIMO systems and is scalable up to 64 nodes. For industrial and enterprise markets, we are seeing continued demand for new orders for AC to DC high density server power supplies. During the quarter, we began sampling the industry's first 4 milliohm silicon carbide JFET. It's RDS on performance of 4 milliohms is best in class on resistance among 650 to 750 volt power devices. This is especially important for applications such as circuit protection that are migrating from traditional switch mode static switches that are on for longer durations. This is a significant milestone for solid-state circuit breakers, and it highlights the trend we are seeing from mechanical to semiconductor-based electrical systems for residential, commercial, and industrial applications. For Wi-Fi enterprise access points, we are engaged to supply ultra-wideband to enable indoor navigation in office buildings, shopping malls, and factories. By adding Ultra Wideband to Wi-Fi access points, the access points become the anchor or reference point, enabling precision navigation for Ultra Wideband-enabled devices. As an added benefit, Ultra Wideband can reduce cost by identifying the optimal location for access point placement during Wi-Fi installation. Lastly, we're leveraging our force-sensing touch sensor technology in new industrial markets, including handheld medical devices that measure oxygen levels. Turning to mobile, which is primarily smartphones and tablets, our largest opportunity remains at our largest customer. We're investing in multiple multi-year programs to increase our content and continue to grow revenue with this customer. Our R&D investments for future programs include products we currently supply to this customer, as well as new products we are not currently supplying. Within the Android ecosystem, Corvo remains the primary RF supplier. We collaborate with Android OEMs on their product roadmaps over multiple years, and we are positioned to drive growth as 4G devices move to 5G at NRSAM. In calendar 24, we expect Android 5G unit volumes to grow greater than 10%. We are also positioned to grow with 5G advances. which occurs with new releases of the 5G standard. Content drivers in 5G Advanced include an additional transmit path, non-perrestrial network connectivity, and requirements for power Class II amplifiers to increase output power, improve data throughput, and extend cell site coverage. During the quarter, we ran multiple new products leveraging our newest BAW and LRT SAW processes. For an Android OEM, We commend shipments of the most functionally dense mid-high-band pad on the market. This new MHB pad integrates the diversity received content that was historically offered in a separate SAW-based module. It is a highly complex multi-chip module that features Corvo's internal BAW, LRT SAW, and gas HPT. as well as CMOS and silicon on insulator that we source from our foundry network. It improves efficiency and reduces power consumption while shrinking board space requirements by approximately 35%. Within mass market smartphones, we secured multiple design wins with our recently launched portfolio of low, mid, high band pad. Each LMH pad integrates the low-, mid-, and high-band main path content that previously required two placements. This saves approximately 40% in board space, simplifies design, and helps customers accelerate their time to market. In mobile Wi-Fi, MediaTek selected Corvo as the exclusive supplier of Wi-Fi 7 FEMS for customers of their DX4 Wi-Fi chipset. MediaTek's DX4 chipset and Corvo's Wi-Fi 7 FEMS are optimized to deliver superior performance for flagship and mass-market smartphones. We also expanded our ultra-wideband wins in the Android ecosystem to include an additional handset customer. Motorola's Moto X50 Ultra, which launched in the June quarter, features Corvo's ultra-wideband SoC. This is our first win in a mid-tier smartphone. and is an early indicator of ultra-wide bands proliferating across mass market smartphone portfolios. At a high level, the Corvo team continues to deliver operational excellence. We are investing in core strengths to differentiate our products while executing on cost initiatives and productivity improvements to reduce our capital intensity to structurally enhance our gross margin. As we committed to during our investor day in June, we are migrating to larger wafer diameters. During the June quarter, we successfully completed our migration to 8-inch BAU, and our BAU lines are now exclusively 8-inch. We also committed to a model of long-term growth in each operating segment, with R&D investments focused on large opportunities. In ACG, our investments are focused on growing in our largest customer. In HPA, our investments are focused on defense and aerospace, along with power management. In CST, our investments are focused on automotive connectivity, advanced Wi-Fi RF solutions, and matter and ultra-wideband SSCs. Corvo's technologies are critical in solving our customers' most complex RF and power challenges related to efficiency, performance, and size, and we are confident in our long-term growth and diversification. And with that, I'll turn the call over to Grant.

Thanks, Bob, and good afternoon, everyone. Revenue for the quarter was $887 million, representing a decrease of 6% sequentially and an increase of approximately 36% year over year. Non-GAAP gross margin of 40.9% in the June quarter came in at the high end of our guidance range of 40% to 41%, benefiting from product mix on higher revenue. Non-GAAP operating expenses in the quarter were $265 million, which included $4 million of spend associated with our digital transformation. As we progress through this multi-year effort, the spend will be included in the other operating expense line on our non-GAAP P&L, and we will provide expense guidance related to this initiative on a quarterly basis. Non-GAAP diluted EPS was 87 cents. which was also above the high end of our guidance range due to higher revenue and gross margin offset by slightly higher operating expense. On the balance sheet, as of quarter end, we had $1.1 billion of cash and equivalents and approximately $1.5 billion of long-term debt outstanding. During the quarter, we retired $27 million of our 2024 notes and have approximately $412 million remaining. These notes are classified as current and will mature in mid-December. Subject to changes in the interest rate environment and other factors, we currently expect to retire these short-term notes later this year. We ended the quarter with a net inventory balance of $727 million, representing a sequential increase of $16 million, composed primarily of WIP and raw material, as we support the seasonal ramp at our largest customers. Turning to the cash flow statement, in fiscal Q1, we generated operating cash flow of $81 million and capital expenditures of $38 million, leading to free cash flow of $43 million. As a reminder, our CapEx spend will vary quarter to quarter and reflects the timing of cash disbursements for capital purchase. Consequently, CapEx as a percentage of sales in any given quarter may be above or below our annual target of approximately 5% of sales. We repurchased $125 million of stock at $101 per share in the quarter. The rate and pace of our share repurchase considers several key factors, including our long-term financial outlook, free cash flow, debt maturities, alternative uses of cash, and other relevant strategic considerations. This approach ensures that our capital allocation strategy balances future growth with return of capital and aligns our underlying goal of delivering long-term shareholder value. Turning to our current quarter outlook, we expect revenue of approximately $1,025,000,000 plus or minus $25,000,000. Non-gap gross margin between 46% and 47%. and non-GAAP diluted EPS between $1.75 and $1.95. As communicated at our investor day in June, gross margin is expected to improve as we execute on key objectives. Progress will be driven by business and product mix, internal factory utilization and productivity initiatives, volume of production outsourced to external partners, and other factors. Throughout the fiscal year, gross margin will vary on a quarterly basis due to these factors. Given anticipated product mix and production schedules, we currently believe fiscal Q1 will mark the low point of gross margin in fiscal 25. We project non-GAAP operating expenses in the September quarter will be approximately $275 million with variability related to the timing of product development spend and other factors. The sequential increase is comprised primarily of other operating expense driven by our digital transformation, which is expected to be approximately $10 million this quarter. During fiscal 25, we continue to expect approximately $40 million of expense related to this project with quarterly variability related to the achievement of progress-based milestones. Below the operating income line, Our non-GAAP expense is expected to be between $8 to $10 million, reflecting interest paid on our fixed-rate debt offset by interest income earned on our cash balances, FX gains, or losses, along with other items. Presuming we retire our 2024 notes in mid-December, we expect non-operating expense to increase in the March quarter by $3 to $4 million over the current run rate. This is due to the differential in the interest rate we pay on the 1.75% 2024 notes versus the interest rate that we currently earn on our cash balances of approximately 5%. Our non-GAAP tax rate for fiscal 25 is expected to be within a range of 10 to 12%. We project this will increase over time due to changes in tax legislation, such as the global minimum tax and other factors. Looking at operations, The Corvo team continues to execute exceptionally well. As Bob mentioned, we completed the transition of our Baa lines to exclusively 8-inch, and we are seamlessly running product through the Beijing and Dezhou facilities, now owned by Luxshare. We are leveraging internal factories and advanced packaging facilities that are critical differentiators for each of our operating segments, while outsourcing to our robust foundry and OSAP partners, where we benefit from their scale and R&D investments. Our three operating segments serve a broad set of markets that are underpinned by multi-year growth drivers. We are critical to solving our customers' most complex challenges related to RF and power, and we are confident in our ability to deliver long-term revenue growth, increasing diversification, and improved profitability. At this time, please open the line for questions. Thank you.

We will now begin the question and answer sessions. To ask a question, you may press star then one on a touch tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. Also, please limit yourself to one question and one follow up. Our first question comes from Quinn Bolton with Needham and Company. Please go ahead.

Hey, guys. Congratulations on the nice results and outlook. I just wanted to start with kind of a big-picture question. Your largest customer, I think, got the market pretty excited about the possibility of AI smartphones and just wondering if you've started to see any impact, any increase in demand driven by the AI smartphone trend, whether it's your largest customer or within the Android channel, and then I've got a follow-up for Grant.

Hey, Quinn, thanks again for your comments. And as far as AI goes, I think we're taking more of a conservative approach. I mean, clearly we saw that in what Samsung released in the S24. And just to remind the group, we've got excellent dollar content in that. And they had a pretty nice ramp. It wasn't tremendous above what expectations were, but they did a good job this year with the S24, whether it was due to AI or not. Not clearly sure. And as far as our largest customer goes, since they haven't released their next generation phones, we're not going to comment. But I think as an industry, it would be wonderful if that AI came out, it was very useful for users, and it reduced the replacement cycle time so that we would see an uplift. That would be fantastic. But that's not what we're modeling at this time.

Got it. Thank you. And then for Grinch, just wondering if you could give us an update on your thoughts sort of as you move into the back half of the calendar year, thoughts on utilization rates, and any update on the flush of the high-cost Android inventory? Is that now mostly out of the model as we move into the September quarter? Thank you.

Thanks, Glenn. In the September guide, we expect a substantial sequential increase in gross margin, and that's primarily related to mix. The September quarter, and to a lesser degree, December quarter, will benefit from higher mix of customized solutions for flagship tier phones. That product mix generally includes a higher amount of externally sourced silicon and SOI content. It's not impacted by internal utilization levels. So that's one dynamic that's occurring. And that compares to our prior two quarters where revenue was comprised of a larger mix of high-cost standard products that were burdened by prior periods of underutilization. In the quarter just concluded, we saw approximately 200 basis points of headwind associated with underutilization. And in the September quarter, we should see it falling to around or slightly less than 100 basis points and then negligible for the back half of the year.

Perfect.

Thank you.

The next question comes from Tim Arcuri with UBS. Please go ahead.

Hi, this is Aman on for Tim. I just wanted to get some feel for your China mobile market. You know, sell-through data has been getting a little bit better recently, but just trying to get a sense for what you might be seeing there and how that might be progressing as we move forward throughout the calendar year.

Hi, I'm on. This is Dave. Yeah, I think we're seeing the same data here. CNET is a little bit better year over year. I mean, right now, based on the numbers we're tracking, we expect it to be up in a low single digit percent, kind of similar to the overall smartphone market. I know we're calling that. So the 618 holiday was a little better year over year. But overall, if you look at the cumulative smartphone sales to date, it's pretty flat to up slightly from what we see.

Thank you.

And the next question comes from Christopher Roland with Susquehanna. Please go ahead.

Hey, guys. Thanks for the question. I guess, yeah, maybe getting back to the September quarter, just a question I keep getting asked from investors is around Revenue still being down year over year. And I think the assumption is you have content growth at your largest customer. And perhaps we have an AI refresh cycle. I know you're conservative there. I appreciate that conservatism. But still, why not growth or at least flat year over year, particularly in mobile? Thank you.

Thanks for the question, Chris. At least in terms of the September guide year over year, the slight decline is principally related to smartphone revenues. We've talked in the past about significant gains in our largest customers, and maybe Dave can follow up from me and comment there. But those assumptions in the guide contemplate total smartphone market skews, unit volumes, timing, mix, and all of that. may prove conservative or vice versa, but we'll have to see how things play out. But overall, I feel very, very, very comfortable with our assumptions. Dave, I don't know if you want to add on the content. Sure.

And you guys know we've talked about some of these marquee models that ramped in the first half and our content there. So, you know, the S24, we had over $5 of content, and we're on the other side of that ramp now. the pixel, we had about $15 of content. So we're also on the other side of that ramp as well. So we had a, you know, some strong ramps in the first half that they were now on the other side of. And then Bob mentioned our low mid high and some design wins we have there. We actually have purchase orders on the books now, and that'll just start to ramp at the very end of this quarter. So, you know, that'll ramp up as we go through the balance of this year and into next year. So we're, it's kind of a timing thing. situation happening there in the Android ecosystem, and so that's probably a little bit of a pocket there that you're seeing in September.

That's very helpful. Thank you. Just a quick follow-up. Bob, sometimes you give us some new products to look out for, like that low-mid-high. You've talked about that before. Is there something else on the horizon, some new cool products that might be needle-moving for you that we should be on the lookout for?

Yeah, the low-mid-high is actually an interesting one because we're actually tiering it for the different product segments in the Android ecosystem. So for the mass tier and typically in the entry area, we're coming out with a lower-cost LMH that we're starting to release to the market. So we're actually expecting that to begin to ramp all of our low-mid highs, starting a little bit this quarter, bigger obviously in December, and then carrying on in a much bigger way in the March quarter. So I think that's a little bit different. A lot of times people think when we talk low-mid high, it's all the same product. It's not. We're tiering it for the different various entry tier, mass tier, to the high tier. So I think that's pretty exciting. And, of course, we're working on some others and don't necessarily need to telegraph those at this time. But also that mid-highband pad where we integrated in the diversity receive functions is doing extremely well. And we saw a really great ramp at one of our larger Android customers there as well.

Yeah, I would just add to that, Bob. I mean, appreciate the question, but these products just ramped. And, you know, our customers and ourselves, we like to get some scale off these products. So they generally run for a couple of years. And so that product Bob has mentioned, we'll have that same content next year. So the $15 or so of content we had this past year, we'll get that again next year. And the low-mid-high, our customers are really excited about that. Very strong engagements across all of our customers in China. And they plan to use that for several generations across their product portfolio. So we're certainly in those discussions for the longer term with all of our customers. We engage in those roadmap discussions several years out. But nothing to report yet. Give us a little time to get some volume under our belt on these current products. Nothing in ACG, but plenty for other markets. Oh, plenty for other markets, yeah.

Awesome. Thank you, guys. Cool new products. Appreciate it.

Thank you.

Again, if you have a question, please press star and then 1. Our next question comes from Carl Ackerman with PNB Paribas. Please go ahead.

Yes, thank you. You spoke about the transition to 8-inch ball wafers for internal manufacturing, which is great, but you've also discussed today and in the past that you have worked with third-party foundries for external silicon. I guess, how do you think about the optimal tradeoff between internal production versus using external foundries over time that might help support margin expansion? Thanks.

Sure. So thanks for the question, Carl. Generally, it's technology dependent. So things like silicon or SOI, we have not done in-house and wouldn't consider doing in-house more efficiently than our partners can. Other areas where we can differentiate ourselves, especially like BAW, where there's not a foundry network available, we'll continue to produce those products. They contain that internally as it differentiates us. And then from an OSAT perspective in terms of assembly and test and other services, we can go out to a large partner network and benefit from their scale and their continued R&D investments.

Yeah, maybe one caveat. Like in the defense market, we see that assembly capability as something that differentiates us. So that's something that we do do internally. Got it.

Got it. Maybe one more, if I may, just how to think about content growth just more broadly. I guess you spoke about at your analyst day how 5G enhanced will create more placement for antenna tuning and perhaps another placement for ultra-high band pad. Could you talk, I suppose, generally in terms of how to think about the adoption for 5G in premium tier handsets over the next year or two? Thank you.

Sure.

Yeah, I think for those of you that were at the investor day, I think Frank did a good job of laying out all the opportunities that we see coming in 5G advanced and unlicensed spectrum and foldable phones and different form factors that are driving lots of challenges for our customers. And so that's all coming. I mean, those trends, those discussions are ongoing with all of our customers in terms of the new products that we're developing and how they plan to integrate those into their phones. And then you've got trends like AI, right? That's going to drive, you know, higher data rates, lower latency, and that's all going to hopefully accelerate those trends that we talked about for 5G advanced and some of those other features and increased power levels. And so, you know, as Bob mentioned earlier, it's still in very early innings for AI. But as that accelerates, it should drive the RF content up faster, and it'll just accelerate the adoption of 5G Advanced.

Thank you.

And the final question comes from Edward Snyder with Charter Equity Research. Please go ahead.

Thanks for taking the question. This is Jack Egan on for Ed Snyder. So you've mentioned your content should grow pretty strongly in the second half of this calendar year. And I know you haven't guided to it, but I was hoping you could just give us kind of a general ballpark idea of your expected content growth, or at least how it compares to prior years. And then I just had a quick follow-up.

Sorry, Jack. When you said content, I don't know what market you're talking about, customers, which one of our business units. I need a little more color to help answer your question.

Sure. Sorry about that. I was talking about mobile content at your large customer.

Okay. What I can say is what I've said probably the last couple quarters is I'm confident in our ability to grow at our largest customer, gain share this year, as well as I think we're in a great position to be able to gain share again next year at our largest customer.

Got it. Okay. And then so I guess on the non-mobile side, we've seen quite a few reports in the analog space so far call out some particular strengths in China in the second quarter that And, of course, it's a very different market from cellular, but so far that demand has seemed pretty broad-based in strength. And so have you seen the same rebound in China, maybe in the HPA or CSG or in the cellular business as well? And were there any areas of specific strength to call out?

Yeah, I wouldn't necessarily maybe focus on China specifically. I mean, when we look at the markets that we serve, know it's pretty broad based across hpa and csg i mean if you look in china for automotive for example i mean definitely the ultra wideband adoption that we have been seeing is starting to pick up there and accelerate for you know things like presence detection and kick sensors and and other advanced radar features on the power side certainly when it comes to ai and data center we're seeing you know, increasing requirements for improving the efficiency in the power supply. So that's driving the adoption of silicon carbide. That's been a great trend for us. You know, another new area of growth for us, both inside the car and outside the car, as Bob mentioned, is circuit protection. So that's a really interesting opportunity for us because circuit protection today is pretty much exclusively done with electromechanical solutions. And so that's all you know, new SAM entering into our markets that will be a solid state. And silicon carbide is the leading technology for that, especially the silicon carbide that we have to offer there. So there's lots of those great new growth trends. And those things have just accelerated, really, since we talked about them at our investor day.

The thing I'd like to add to that, Dave, is the V2X that I talked about in my prepared remarks in China is actually China's leading all the regions as far as adopting V2X. And that's pretty exciting for us. Again, that's going to be ramping next calendar year, but it's good to see that there. And then, you know, we'll expect it obviously to flow into Europe and then obviously the U.S.

Got it. Thanks. That's helpful.

This concludes our question and answer session. I would like to turn the conference back over to management for any closing remarks.

We want to thank everyone for joining us on tonight's call. We appreciate your interest. We look forward to speaking with many of you at upcoming investor events. Thanks again, and have a great evening.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.