Viavi Solutions Inc.

Good afternoon. My name is David and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Yavi Solutions 4Q 2022 earnings call. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you'd like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one once again. Thank you, Sagar Hibbar, Head of Investor Relations. You may begin your conference.

Thank you, David. Welcome to VRV Solutions' fourth quarter and fiscal year 2022 earnings call. My name is Sagar Hibbar, Head of Investor Relations and Corporate FP&A. Joining me on today's call are Oleg Hykin, President and CEO, and Hank Dirksen, CFO. Please note, this call will include forward-looking statements about the company's financial performance. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our current expectations and estimations. We encourage you to review our most recent annual report and SEC filings, particularly the risk factors described in those filings. The forward-looking statements, including guidance, we provide during this call are valid only as of today. VRV undertakes no obligation to update these statements. Please also note that unless we state otherwise, all results except revenue are non-GAAP. We reconciled these non-GAAP results into our GAAP preliminary financials and discussed their usefulness and limitations in today's earnings release. The release plus our supplemental earnings slides, which include historical financial tables, are available on BRV's website. Finally, we are recording today's call and will make the recording available by 4.30 p.m. Pacific time this evening on our website. I would now like to turn the call over to Hank.

Thank you, Sagar. Fiscal Q4 2022, set an all-time record for VRV revenue and a fourth quarter record for non-GAAP profitability. Fourth quarter revenue came in at $335.3 million, up 7.8% year-over-year, exceeding a guidance range of $315 to $329 million. Growth was primarily driven by improved demand for our core OSP and 3D sensing products. VIAVI's operating profit margin at 21.3% was within our guidance range of 21 to 22%, improving 50 basis points year over year. EPS at 24 cents met the high end of our 22 to 24 cents guidance range and increased 9.1% from 22 cents in the prior year, a combination of strong operating performance and the impact of an improving capital structure. The VUDI diluted shares outstanding at the end of fiscal Q4 2022 of 231.3 million shares decreased from 241.9 million shares in the year-ago period. substantially result of refinancing our convertible debt while continuing to execute on a share repurchase program during fiscal 2022. The outstanding dilution resulting from the remaining convertible notes was 1.6 million shares during the fourth quarter compared to 10.4 million shares a year ago. Moving on to our reported Q4 results by business segment. starting with NSE. NSE quarterly revenue at $246.2 million, up 4.1% year over year, was within our guide range of $240 to $250 million, a new quarterly record in this business segment. Within NSE, NE increased 4.5% from a year ago. to $222.2 million, reflecting continued strong demand for our wireless and optical lab and production products. SE revenue at $24 million was flat year over year, albeit at an improved product mix. NSE gross profit margin at 64.9% increased 150 basis points year over year. Within NSE, NE gross profit margin at 64.2% increased 110 basis points from last year, primarily a result of leverage on growth and favorable product mix. SE gross profit margin at 71.3% increased 580 basis points year over year. NSE's operating profit margin at 15.1% was slightly below our guidance range, albeit flat year-over-year. Higher variable sales commission costs on strong bookings performance during the quarter was offset by gross profit margin expansion. Now turning to OSP, fourth quarter revenue at $89.1 million was up 19.8% from a year ago and improved sequentially by 5.2%. Revenue exceeded the guided range of $75 to $79 million due to better than expected demand for anti-counterfeiting products during the quarter. Close profit margin at 55.9% decreased 160 basis points year over year, driven primarily by raw material costs and startup costs in our new Arizona facility. Operating profit margin at 38.6% was within our guidance range of 38.5 to 39.5%. Although down 20 basis points year over year, a result of the aforementioned close margin factors offset by disciplined OPEX management. Moving to our fiscal 2022 full year performance. Despite the COVID-19, pandemic-related supply chain issues and inflationary pressures, Viavi was able to mitigate much of the impact, resulting in a strong finish to a record of $1.3 million, up 7.8% from fiscal 2021. NSE reached a record revenue of $949.1 million, up 13.3% year-over-year, well within the range of our long-term goal. OSP at $343.3 million saw a modest decline of 4.9% in revenue compared to record levels in 2021, but still exceeded the high end of our 2022 goal provided in 2019. VIAVI's full year 2022 operating profit margin at 22.2% expanded 110 basis points and exceeded the high end of our goal of 21% by 120 basis points. Within our NSE segment, operating profit margins expanded 460 basis points from 11% in 2021 to 15.6% in 2022 due to leverage on revenue growth combined with disciplined OPEX management. Within our OSP segment, operating profit margins reduced from a record level of 44.7% in 2021 to 40.5% in 2022, a result of lower revenues in combination with higher raw material costs. Full-year 2022 EPS at 95 cents increased 14.5% or 12 cents from 83 cents in 2021, and is ahead of the high end of our goal of 90 cents for 2022, a result of operating performance and an improved tax rate. Now turning to the balance sheet. At the end of fiscal Q4 2022, the ending balance of our total cash and short-term investments was $565 million, down $139 million, compared to a year ago, mainly result of refinancing 57% of our convertible debt with longer notes at a favorable rate. During 2022, we generated 178 million in operating cash flow and deployed 73 million or 5.6% of revenues towards capital expenditures, resulting into 106 million in free cash flow generation. We were able to buy back $45.5 million in common shares under the 2019 repurchase program and invested $8.3 million in M&A activity. Looking at just the fourth quarter, operating cash flow was strong at $73.6 million, an increase of $11 million compared to $62.6 million in the year-ago period. The increase is a result of higher operating income coupled with benefits from supply chain investments made early in the year. In addition, we invested $19.1 million in capital expenditures during the quarter, compared to $25.4 million in the prior year, as we progress towards completion of our Arizona production facility. As you may recall, we had targeted the reduction of our 2023 and 2024 outstanding convertible notes to continue to improve our capital structure. During the first three quarters of 2022, we redeemed approximately $370.6 million of these notes from the original $685 million in principal value. In the fourth quarter, we completed transactions to extinguish an additional $22.4 million in principal value of convertible nodes at a total reacquisition cost of $27.2 million. Bring the principal value of our combined convertible nodes outstanding to $292 million at the end of fiscal 2022, or 43% of the original principal value. During fiscal Q4, we repurchased 2.1 million shares of common stock for $28.9 million under the 2019 repurchase plan. The remaining authorization under the 2019 repurchase plan is $67.3 million. Now on to our guidance. We expect the fiscal first quarter 2023 revenue to be approximately $324 million, plus or minus $7 million. Operating profit margin is expected to be 21.4% plus or minus 70 basis points and EPS to be in the range of 22 cents to 24 cents. We expect NSE revenue to be approximately $236 million plus or minus 5 million with operating profit margin at 14.5% plus or minus 50 basis points. OSP revenue is expected to be approximately $88 million, plus or minus $2 million, with operating profit margin at 40%, plus or minus 100 basis points. Our tax rate is expected to be approximately 16% to 17%, and we expect other income and expenses to reflect a net expense of approximately $6 million. Share count is approximately 232 million shares, based on current stock price levels and includes the dilutive impact of approximately 2.5 million of the remaining convertible notes. With that, I will turn the call over to Oleg.

Thank you, Henk. I'm pleased with VIAVI's performance during the fiscal Q4 2022, resulting in a record quarterly revenue and profitability. We have also delivered an all-time record revenue and non-GAAP profitability for the entire fiscal year 2022. In addition, we have also exceeded the high end of our 2022 profitability goal set during the 2019 analyst day, despite significant headwinds from COVID and inflationary pressures. The NE segment achieved the new revenue high in fiscal 2022 with both fiber and wireless growing double digits year over year, benefiting from strong investments in both service providers, and hyperscalers looking to upgrade their networks. Despite the supply chain headwinds and inflationary pressures, we executed well in our strategy, growing revenue, profitability, and gaining market share. In the fiscal Q4, fiber revenue growth was driven by fiber to the home deployment, 400 gigi network and data center upgrades, and accelerating market adoption of 800 gigi and PCI Express Gen 5 technologies. The 5G wireless demand also continued to be strong, driven by investments in O-RAN and front-haul wireline network expansion. Fiscal Q4 also saw very strong NE bookings, resulting in a seasonally stronger Q1 backlog and demand visibility. The SCE business revenue was flat year over year for fiscal Q4 2022. That said, the annual SCE revenue grew 13% plus year-on-year, increasing our confidence in the revamped data center and assurance strategy and products. We expect continued strong growth in our SE business during fiscal 2023. Now turning to OSP. The OSP business segment delivered better than expected revenue and profitability, with revenue succeeding our guidance range. Our fiscal Q4 anti-counterfeiting product revenue was up 27% year on year, driven by a combination of global fiscal stimulus and inventory replenishment. Looking ahead, we expect Q1 2023 revenue to be roughly flat to Q4, with lower anti-counterfeiting demand being offset by stronger 3D sensing. To recap, In fiscal year 2022, we successfully executed on the VIAVI's growth strategy that we have outlined during the September 2019 analyst day and have exceeded our non-GAAP profitability and ESP targets. The major highlights include NSC business segment achieving 13% growth in revenue and 60% growth in non-GAAP operating margins for fiscal year 2022. We're proud to have successfully executed despite the global pandemic supply chain headwinds, and inflationary pressures. The OSP business exceeded our three-year strategic goals for both revenue and profit. And lastly, we have successfully revamped our product portfolio to leverage secular trends and expand our TEM, positioning VIAVI for continued revenue growth, increased scale and profitability and market share gains. As we kick off our next three-year strategic plan, We invite you to join us at the Analyst Day event in Boston on September 13th, where we will outline our strategy and goals for the next three-year cycle. We hope to see you there. There will also be a live webcast of our presentation. We'll provide additional information regarding the event over the next 30 days. In conclusion, I would like to thank my VIAVI team for another quarter and fiscal year of strong performance. and express my appreciation to our supply chain partners, customers, and shareholders for their support. I will now turn the call over to Sagar.

Thank you, Oleg. David, let us begin the question and answer session. We ask everyone to limit discussion to one question and one follow-up.

Thank you. At this time, I'd like to remind everyone, in order to ask a question, press star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. We'll take our first question from Alex Henderson with Needham & Company. Your line's open.

Great, thanks. Nice quarter, guys. I was hoping you could talk a little bit about the split between 3D sensing and the counterfeiting products in the quarter. My assumption is that 3D sensing is around $15 million or so in the quarter and that the upside was heavily skewed due to that 20% kind of jump in the security products. I'm assuming when you look out to the 22 to 23 window that we revert back towards that standardized $60 million a quarter baseline in OSP. First of all, is that correct? And the second question is really around the currency exposure and the mix of business internationally. Can you talk about what's going on in your EMEA business, which was down substantially and obviously made that up with very strong domestic growth?

Okay, you asked three questions in one. Okay, so let's do it. Just do what you want to answer. Sure.

Sure. Your 1st question was a mix between 3 sensing and what we call call speed. I think your numbers are pretty close actually slightly better on 3 sensing and 15Million for the 4th quarter. So you're pretty close. And then I think your follow on question was on the outlook.

the outlook i think the uh i guess the first and osp i mean we we're going to see some pullback in the counterfeiting demand but we also have a stronger demand on 3d sensing so net net it's kind of ends up being a wash and the remainder of the business staying fairly steady um you know quarter over quarter and in terms of the uh europe You know, the Europe business, I mean, was not that, I mean, clearly, summer is a little bit, season really weaker because a lot of vacations. But we continue to see Europe being healthy, although, you know, the challenge in Europe has been more, you know, the European currency has devalued against the dollar. So in the relative terms, our products have gotten more expensive and But, you know, we continue to see pretty strong demand from European NAMs and from service providers who are now in a multi-year, many of whom are in a multi-year fiber deployment to the home. And that business continues to be pretty robust. I mean, clearly, you know, we're all reading the same news and, you know, Europe is, you know, they're expecting some headwinds and we are well prepared for that. But at this point in time, our European businesses continue to be fairly robust. And I guess it's really driven more by a multi-year investment cycle that are just ongoing. It's not really a spot purchases or anything like that.

So, Ty, we're reading the numbers correctly on your slide deck. It was down 22%. Is that mostly currency related?

I guess it comes down to where we ship the anti-counterfeiting products. pigments, whether they go to Europe or some other geography. So yeah, I mean, so I think, you know, on the NSC side, I don't think we have that much variability.

So there's a little bit more project related, Alex, on the NSC side in a wireless and lab business, not so much an OSP issue. And there was a little bit of FX translation that drove the year over year down. The number was about 5 million for the quarter. purely FX translation on a weaker euro or stronger US dollar. Good.

I'll see the floor. Thank you for letting me ask the questions. Sure. You're welcome.

Okay. Next, we'll go to Tim Savago in Northland Capital. Your line's open. Go ahead, Tim. Your line's open.

Yeah. Sorry about that. Came a little quicker than I might have thought. Question on the... the network enablement side, a couple of things. I'll ask them both at once versus a follow-up, which is you mentioned strong bookings and backlog and any maybe even unseasonably strong, which would be very much in line with everything we've been seeing across certainly the fiber ecosystem, maybe 5G as well, and yet you're guiding revenues down sequentially. Can you reconcile that? And looking at the year, um fiscal 22 you know you grew any revenue 13 and i had some very easy comps in the first half and grew it like uh mid single digits you know six percent or so in the second what's a reasonable growth expectation for uh for the any segment for fiscal 23. thanks well you know we generally don't give uh annual guidance um i think you know uh you know

all the worries around the recession aside it should be a pretty uh healthy year um i would say probably you know maybe even seeing um i'd say mid single digits um however i think given that you know and i don't i don't want to jump ahead i mean right now we are not seeing it yet but let's assume there is a recession and pullback um i'd say it may be slightly down or even up to flat uh year on year uh depending on product line. So I think at this point it's probably too premature to talk about fiscal 23 or even more calendar 23 until we see how we exit this calendar year and whether or not a lot of the momentum we are seeing in Europe, North America, and Asia will hold up or the customers pull back on their both R&D budgets as well as their deployment pace.

And on the booking strength, contrasted with the sequential revenue decline, anything to talk about there?

Well, the bookings, remember, a lot of our bookings is a bookship within a quarter. And generally, our September quarter is a seasonally weaker quarter in NE. But because we have such very strong bookings, it's coming in to be pretty close, I mean, to... the June quarter. And if you really adjust that last year, we had a one big order that was shipped to a North American customer. If you adjust for that, it's actually coming in a strong quarter on the round rate business with that one off order excluded. So we actually, you know, on seasonality wise, because it's really, you know, rule of thumb, our June and December quarter is the strongest quarter for SE business. And September and March quarter are the seasonally weaker quarters.

Okay, thanks.

Okay, next we'll go to Sameek Chatterjee with JP Morgan. Your line's open.

Hi, this is Angela Jin on for Sameek Chatterjee. I know you've mentioned you haven't really seen any sort of demand weakness from the recession, but are you seeing any of your customers, you know, aside from service providers and hyperscalers, you know, including them and aside from them, you know, delay any project or rethink some of their investments in other 5G technologies, such as, you know, industrial or automotive applications or enterprise and private 5G. And then I have a follow-up.

Yeah. So, I mean, we don't really do much with the automotive or anything like that. Most of the customers, aside from service providers, are in the wireless and fiber optic telecommunication space. So to answer your question that we haven't seen the decline, per se. It continues to be pretty strong. But let's be realistic. I think the slowdown hasn't really trickled down from the top to the engineering groups. Right now, they have a budget for the year, and they're spending it happily. But also what I've seen is even with a mild recession, companies that like get hit by slowdowns, you don't really see, they may see some reduction in production testing orders, but they generally don't slow down the R&D orders because if anything, they try to accelerate product development during the dial cycle. So I think, I would say if there's really the pullback recession couple quarters, uh that business may just flatten out maybe just goes down slightly on the 11 production space the service provider i mean there the programs are pretty much locked and loaded the question would be are they gonna take delivery in a quarter or they spread them out over a couple quarters so they may defer some of the deliveries and things like that but given a lot of the um kind of pent-up demand and um you know clearly they have a lot of projects um underway I mean, we think the order momentum will continue to be relatively stronger as compared to other recessions.

Got it. And then for my follow-up, on the OPEX line, you know, generally been very disciplined about OPEX, but there was a small bump up in this quarter. And so I was wondering if that was a reflection of the current inflationary environment and if this could be sort of the new norm of OpEx level in the next few quarters, just given the current environment that we're in.

Well, I'll start and I'll let Hank. Well, I mean, our OpEx continues to be pretty disciplined. I think the bump up came in was really a function of commissions and bonuses paid out because we kind of work on semi-annual cycles. So that was for the first half where I think the bookings and the performance have been above the annual operating plan. And the only other thing, we are making adjustment in the salaries, but nowhere near by the inflation level. I think we are probably targeting somewhere in a 4% pay adjustment. And, you know, that hits mainly North American OPEX, and then there's obviously adjustments in other regions, where in some cases, The higher, you know, salary adjustments we're making have been more than offset by the currency devaluations with the dollar. So, but I would say the biggest impact on OPEX increase would be in North America, where we're roughly doing about 4% increase this year.

Yeah, there may be a little bit of additional T&E that sort of hold into OPEX.

Oh, it's coming back with travel. That's right.

So, travel is coming back a little bit. Deflationary impacts, though, like you spoke about. But think of OPEX going forward, not quite at the 41.2% that you saw in the fourth quarter, but below that 41%, between 40.5% and 41%. I think that's the way to think about it going forward.

Great. Thank you.

You're welcome.

Next, we'll go to Mehdi Hosseini with Susquehanna.

Your line is now open. Yes, thanks for taking my question, and I promise to limit my follow-ups to two. Oleg, it seems like based on your commentary on OSB, the 3D sensing should see a meaningful year-over-year growth, September 22 versus September 21. Is that a Fair assumption?

Well, actually, not really, because if I look at the last year, if you remember, we had a very strong 3D sensing demand, and then our customer realized they didn't have enough chipsets to build the units because many of the other suppliers fell short. So as a result, there was a big inventory rebalancing in the December quarter, and we saw our orders flashed in December, and then they recovered in the March quarter. I think this year it's a bit more linearized, so I think the demand the year-on-year is roughly the same. I mean, if you, in fact, I mean, you may have a little bit better volume because of the deeper penetration of 3D sensing into our multiple other platforms like handheld and the laptops and things like that, offsetting some of the ASP erosion. So overall, we think it's going to be a pretty robust kind of flat-ish year-on-year, a little bit stronger than June quarter. But if you look at September on September, fairly similar to a year ago. Where we are seeing decrease is the anti-counterfeiting pulling back from a year ago levels, where we hit close to $100 million last year. And it was really, so I'd say probably you're seeing about $10 million pullback on anti-counterfeiting predominantly. Sure. And all else remaining roughly the same.

Sure. And just to continue with 3D sensing, it seems like we're off to another strong small phone cycle for the high-end application. Last year, your overall overall OSB revenues were down five, but given the strength of the high-end smartphone, another upgrade cycle coming, could you actually be able to have the OSB revenue in this fiscal year flat to up, or should we assume that it's going to turn more like a flat to down?

Well, remember the I think it's flat is more accurate because, you know, I mean, I have different people asking me, it's like, well, aren't the mobile phone sales going to be down this year? So while we're not really seeing a reduction in volume, but we cannot comment on number of phones because you also now have greater level of penetration. So instead of just one filter, you may have two filters performed because you have more of these higher end phones with the world facing cameras and things like that. So And we're just judging from the mix. We think adjusted for ESP erosion is roughly flat revenue this quarter. Thank you. Now, if the new product launch is very strong and there's a strong demand, we will most likely see that demand in the December quarter. Because remember, as I keep pointing out to people, our lead time is two weeks. So if customer really wants to increase the volume demand, they'll

um you know we can deliver we can uh turn it on um in the within a very short period of time okay and then speaking of the time um i'm under assumption that there's no more supply chain disruption components are available uh for your nsd business unit is that fair assumption i'd say it's a fair assumption for probably you know 98 of the devices

I think you still, the area you still have some challenges. I would not say less of a supply, but if you wanted to get an additional spot market deliveries, it's really FPGAs is still the only remaining thing that you need to watch carefully. Pretty much everything else, as I've been telling you guys for a year, by summer we're really not seeing any thing and if anything now going into this quarter we're seeing lead times coming pulling in much uh quicker so what used to be let's say 18 months it becomes 12 months then six months and heck now you can even get it on a spot market all of a sudden okay if i may just a quick follow-up to this um a few quarters ago you actually left some millions of

of revenue on the table because of the component shortages, you have been able to have a pretty robust revenue so far, beating your own guide. Should we assume that you were able to recapture those revenues that you left on the table, or is that coming in the second half of the year?

Well, no, no, we've pretty much recaptured. But remember, one of you said the revenue that slipped out, it didn't, it slips out really by maybe a matter of weeks. So you recapture it beginning of the first month. And it was always like sub $10 million, up to $5 million. I think at this point, we're not really, I'd say, leaving anything on the table. Okay.

All right. Thank you. Next, we'll go to Madam Marshall with Morgan Stanley. Your line's open.

Great. Thanks. A couple of questions for me. Maybe just on the anti-counterfeiting strength, even as it's kind of pulled back from last year, it's probably remained stronger than you guys were thinking. And I know that it's tough to get full visibility there, but is that inventory building, is that reprints driven, is there still stimulus programs kind of internationally that we should be thinking of? Or I guess we're just trying to get a sense of what do you think is kind of a baseline run rate level of that business at this point? And then I have a follow up.

Yeah, I think the baseline for that business is now, I would say, like $58 to $60 million. And I think we are probably two to three quarters away from really everybody getting back to their reasonable levels of inventories that they carry. There's still, you know, some countries are further away from getting back to their normalized inventories. Others are almost there. And I would say, like, if I compare year on year, we had a, you know, we had a lopsided delivery for a major customer last year. More came in in March, and less they pulled in from the June. This year, it's really been more back to the traditional demand, March and June. So we had a pretty good, I mean, just as we expected seasonally, June quarter, September quarter is usually a bit less, but it's not materially less, but then increase in the 3D sensing more or less offsets that. But I continue to see the anti-contrafitting, I think now entering more of a steady state. I mean, a lot of these perturbations that we saw with COVID and stimulus and all that, it's kind of been subsiding and now it's moving back towards traditional reprints, release of the new notes and things like that. It's less of the stimulus driven. It's more kind of basic business driven. But the reason we're saying now it's at the higher level, there's just fundamentally way more notes out there in the world. And to the extent recession is coming, we've seen different countries announcing plans to increase level of liquidity in their economy. But I think nobody is doing anything crazy like dropping trillions of dollars from helicopters. We don't see anything like that on the horizon. It's more of a traditional demand profile.

Got it. That's helpful. And then maybe, you know, you spoke to the NSE strength this quarter, kind of being more wireless driven. Just any commentary about cable or just you know, what you're seeing from them, particularly after a pretty strong last couple of years?

Well, I would say really the two things that really driving is fiber and infrastructure wireless. We are seeing, you know, we have several major customers and they kind of take their big deliveries in March quarter, June quarter, September quarter, that kind of thing like that. And then there is all the service providers. What we are seeing Aside from this, kind of like our big three, four customers taking major deliveries annually, is we're seeing what's even more encouraging to me is broadening of the customers. And it's a combination of service providers establishing compliance labs as they try to drive more O-RAN adoption, right? And doing more of the front-haul build-out. A lot of these new entries you know in the open area access network like the likes of my veneer Altia stars and some of these other players like Rakuten or dish networks getting into the space cable companies getting into wireless. They're all buying these wireless equipment so they can emulate wireless network as they develop product. So we're seeing a significant broadening of the. wireless customer base so maybe they will not buy tens of millions of dollars of equipment but they buy millions of dollars of equipment so so that's really driving the wireless and on fiber it's um you know two big drivers are the uh building out of fiber to the home that is in really early stages um and we now have multiple countries launching a multi-year initiatives to connect uh most of their homes uh to fiber um with uk kind of leading the way you know now there's italy and germany and of course a lot of activity in the us and now we're seeing uh similar type things happening in other european countries and in asia and so that's really the whole uh fiber to the home is really driving a lot of our fiber field instrumentation and the um upgrade to the wireless networks and the telecom networks you know the front hole the fiber just you know deeper fiber penetration into the network is driving a lot of the modules customers and they're buying a lot of test equipment for production and development and then of course there's this whole migration to 400 and 800 gig that is driving high-end fiber equipment. So, I mean, between fiber and wireless, it truly has been a great momentum overall.

Perfect. Thanks. Okay.

That concludes today's question and answer session, and I'll turn the call back over to Sagar for any additional or closing remarks.

Thank you, David. This concludes our earnings call for today. Thank you, everyone.

This concludes today's conference call. You may now disconnect.