BlackBerry Limited

Good morning and welcome to the BlackBerry Fiscal Year 2020 Second Quarter Results Conference Call. My name is Lisa and I'll be your conference moderator for today's call. During the presentation, all participants will be in a listen-only mode. We will be facilitating a brief question and answer session towards the end of the conference. Should you need assistance during the call, please signal a conference specialist by pressing star zero. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to our host for today's call, Christopher Lee, Vice President of Finance. Please go ahead.

Thank you, Lisa. Welcome to the BlackBerry Fiscal Year 2020 Second Quarter Results Conference Call. With me on the call today are Executive Chairman and Chief Executive Officer John Chen and Chief Financial Officer Steve Capelli. After I read our cautionary note regarding forward-looking statements, John will provide a business update and Steve will then review the financial results. We will then open the call for a brief Q&A session. This call is available to the general public via call-in numbers and via webcast in the investor information section at blackberry.com. A replay will also be available on the blackberry.com website. Some of the statements we'll be making today constitute forward-looking statements and are made pursuant to the Safe Harbor provisions of applicable U.S. and Canadian securities laws. We'll indicate forward-looking statements by using words such as expect, will, should, model, intend, believe, and similar expressions. Forward-looking statements are based on estimates and assumptions made by the company in light of its experience and its perception of historical trends, current conditions, and expected future developments, as well as other factors that the company believes are relevant. Many factors could cause the company's actual results or performance to differ materially from those expressed or implied by the forward-looking statements, including the risk factors that are discussed in the company's annual information form, which is included in our annual report on Form 40F and in our MD&A. You should not place undue reliance on the company's forward-looking statements. The company has no intention and undertakes no obligation to update or revise any forward-looking statements except as required by law. As is customary during the call, John and Steve will reference non-GAAP numbers in their summary of our quarterly and annual results. For a reconciliation between our GAAP and non-GAAP numbers, please see the earnings press release and supplement published earlier today. I will now turn the call over to John.

Thank you, Chris. Good morning, everybody. In our second quarter, fiscal quarter, total company revenue was $261 million. It grew 22% over the year. Total software and services was $256 million, growing 30% year-over-year, and driven by double-digit percentage growth in software and services billings in the same period. Earnings per share were breakeven, and free cash flow was positive as we continued to increase our investment in product development and go-to-market to drive long-term sustainable growth. All of our business performed at, or better than our revenue expectation, except for enterprise software and services, or we call ESS. I will speak more about that later. We are executing upon the four operational priorities for fiscal 2020 that we spoke about at our analyst stage, which many of you have attended. Let me remind you what those are. They are developing BlackBerry Spark, the product, integrate BlackBerry Silence, first with the UEM product and then with the QNX product, broadening our reach in regulated industry verticals, and expanding into new verticals. Proof points of this execution during the quarter will include the following. First, the release of BlackBerry Intelligent Security, our initial use case on the Spark platform, with positive validation from both the industry and customer alike. BlackBerry Intelligent Services is the foundation of our zero-trust architecture. Secondly, the integration of Silence AI technology into our product with a combined UEM and Silence product scheduled for release in early calendar 2020, as we have previously communicated. Thirdly, new logo wins in ESS and BlackBerry Technology Solution, or BTS, came in in government, financial services, and transportation, signifying deeper penetration into regulated industry verticals. And last but not least, expansion to new industry vertical, such as in the oil and gas industry. I will now move to our business commentary, starting with the IoT business. Total IoT revenue declined 5% year over year. DTS continued to perform well with double-digit growth in line with our expectation, offset by softness in our ESS business. The softness in our ESS business is primarily due to the retooling of our sales force. We anticipate the impact from this retooling to last another two quarters while we strengthen our go-to-market and increase our pipeline. Our goal of sequential quarterly revenue growth provided last fiscal quarter was push out by three months as the retooling caused some disruption in the development and closure of our pipeline. We believe that the changes we made in sales leadership last quarter and the subsequent changes in other personnel support our objective to increase our reach in existing regulated industry as well as expansion into new verticals. Our regulated industry business remains healthy and stable. We added new logos to win in the government vertical, including the U.S. Department of Health and Human Services, the National Assembly in France, the Cybersecurity Malaysia, a government agency under the Malaysian Ministry of Communication and Multimedia. Our FedRAMP cloud authority to operate ATO increased from nine to 10 United States government agency. And the BlackBerry FedRAMP cloud user base increased by 16% since this last March when we last reported to approximately 1.4 million users. In the financial verticals we added the ICBC, the industrial and commercial bank of China, has a new logo among many others. We also experienced strong growth in the oil and gas industry, a new and developing vertical of focus for BlackBerry. While we are not satisfied with the short-term results, the timing of these changes is important as we are entering a refreshed cycle of our security and communication products that are well-suited for the current security trends. Presently, we are in beta with about 10 customers for BlackBerry Intelligence Security, which we actually announced at Black Hat conference. These 10 customers are interested in the continuous authentication and the adaptive security features of our product. Also, many of our top customer has expressed early interest in the AI-driven mobile threat detection that is natively integrated with the UEM Council and other BlackBerry apps. In this evolving security landscape, we believe data and identity, not the network, is the new security parameters. Now let me walk through some of the BTS highlights. BlackBerry QNX continues to represent the vast majority of BTS revenue. All of BlackBerry QNX revenue stream grew year over year, notwithstanding the downturn in global auto production. We are encouraged by this trend because our customers are spending increasing amounts on BlackBerry software in current and future auto designs. This will definitely increase our output. The recent announcement with Danso and Subaru highlights this trend of BlackBerry achieving more content per vehicle. Our jointly developed HMI, human machine interface, digital cockpit system is the first of its kind and we start to ship in Subaru vehicle this fall in the United States. This leading-edge digital cockpit leverages BlackBerry QNX hypervisor, the operating system, and the digital instrument cluster, while contribute to greater technological efficiency in the car and a safer experience for the users. In a quarter, we have a total of 26 design wins. Eight of the design wins were in the automotive market. All of these wins were for digital carpets and digital instrument cluster designs. The remaining 18 designs wins were in the general embedded market, primarily in the defense industry and medical industry. Further expansion in the general embedded market has been a stated strategic priority this fiscal year. A recent announcement with Deborah Lang Rover demonstrated our thought leadership in the automotive software market, with the addition of the Cylance AI security capabilities. We have the opportunity to provide a first cybersecurity platform for the auto market. JLR is the first to collaborate with us. We are working with others in the auto industry and those interactions looks promising. The Chief Executive Officer of JLR, Sir Ralph Spacht, will deliver the keynote address at our security summit in London on October 2nd and speak more on the topic. Furthermore, we plan to demonstrate a combined QNX and silence capability at CES 2020. Before I move into our licensing, let me briefly talk about our radar business. In the quarter, we added eight new customers, including Labatt Brewing Company, and we have repeated purchase from a number of our customers, including Lowe's Company for our partners, Frexavan. We also added Mattson after quarter end. This continues to demonstrate the demand for our product in the market. Moving on to our licensing business, revenue grew 27% year-over-year, above our expectation as several IP licensing arrangements occurred earlier than expected. We also anticipate the second half of the fiscal year to be stronger than the first half. For fiscal 2020, we now anticipate growth over last year instead of the 5% decline as we previously communicated. Now on to silence. Revenue came in at $51 million, representing an increase of 24% year-over-year, in line with our expectations. This was driven by approximately a 22% year-over-year increase in the number of active subscription customers, with strength on financial services, manufacturing, and professional services industry. Notable wins in the quarters were from ABB Pioneer Natural Resources, Bank United, and NASA. Annual recurring revenue was approximately 170 million and up 21% year-over-year. Dollar-based net retention rate continues to be greater than 100%. From a product standpoint, Sidelines Guard, our managed detection and response subscription solution, was released this past July. The initial feedback received from existing customer, partner, and interested buyer has been very positive, and it substantiates that Guard is a comprehensive solution that provides advanced threat hunting and mobile convenience. Our pipeline growth is off to a very good start. With continual innovation, we have a great opportunity to gain shares in this $11 billion plus endpoint security market, currently led by legacy antivirus vendors. The collective market share for all the next gen, or next generation, endpoint security players, which includes Cylance, is currently less than 10%, so lots of room to grow there. We acquired Cylance for our strategic vision that we stated last year, which is to secure the Internet of Things. We believe we can deliver on this strategy by combining our strength in unified endpoint management, endpoint protection, secure communications, embedded systems, as well as AI onto a single platform. Recent market consolidation validates our early vision and underscores the scale and breadth of technological capabilities that BlackBerry possesses to be a winner in this evolving endpoint security market. Before I turn this call to Steve, I have some personnel changes to announce. Extending our commitment for growth, I'm pleased to announce that Steve Capelli will move into the role of Chief revenue officer. Steve will work with the business leader in IoT and Sidance to drive integrated revenue-generating processes across BlackBerry and assist in the development of our endpoint security go-to-market strategy. Having worked with Steve in the past in a very similar role, he is uniquely qualified with a strong sales experience and knowledges of our market, a full understanding of our strategic goals. Furthermore, I'm pleased to announce that Steve Ray will be promoted to the Chief Financial Officer. Steve Ray has been at BlackBerry for five years as Vice President and Corporate Controller, and most recently as the Deputy CFO for the last several quarter in anticipation of this transition. Steve has an impressive 25-year background as a leader in finance and operation in the technology industry. These changes will take effect as of October 1 of this year. With that, let me turn the call over to Steve Capelli to provide more detail about our financial performance.

Thank you, John. I'm excited about my new role as Chief Revenue Officer. With the acquisition of Cylance and the leading-edge product launches ahead of us, this is the right time to drive a number of programs to increase the synergies of our products, people, and go-to-market activities across all of our businesses. The transition of the CFO role to Steve Ray should be a smooth one, as we have been working on this for a number of quarters. Now onto my discussion of our Q2 financial performance. As usual, my comments on our financial performance for the fiscal quarter will be in non-GAAP terms unless specified otherwise. Please refer to the supplemental table in the press release for the GAAP and non-GAAP details. We delivered second quarter non-GAAP total company revenue of $261 million and GAAP total company revenue of $244 million. I will break down revenue shortly. Second quarter total company gross margin was 75%. Our non-GAAP gross margin includes software deferred revenue acquired but not recognized of $17 million and excludes stock compensation expense of $1 million and restructuring costs of $1 million. Operating expenses of $193 million were down sequentially by $1 million as we optimize our spending while investing in product development and go-to-market. Our non-GAAP operating expenses exclude $36 million in amortization of acquired intangibles and $2 million in acquisition and integration costs, which collectively represents about $0.07 of our GAAP loss per share. Our non-GAAP operating expenses exclude $13 million in stock compensation expense, $4 million for software deferred commissions expense acquired, $2 million in restructuring costs, and a benefit of $23 million related to the fair value adjustment of the convertible debenture. Non-GAAP operating income was $2 million, and non-GAAP net income was $1 million. Non-GAAP earnings per share was $0 cents in the quarter. Our adjusted EBITDA was $20 million this quarter, excluding non-GAAP adjustments previously mentioned. This equates to an adjusted EBITDA margin of 8%. I will now provide a breakdown of our revenue in the quarter. Total software and services revenue was $256 million, representing 98% of total company revenue, broken down as follows. The IoT business accounted for 51% of total revenue. The BlackBerry Cylance business accounted for 20% of total revenue, and the licensing business accounted for 27% of total revenue. Other revenue is now comprised of service access fees. Service access fees were 5 million down from 12 million, or 58% year-over-year. Total handset device revenue was zero, down from 5 million, or 100% year-over-year. Both service access fees and handset device revenue were expected to decline given the continued wind down of these legacy businesses. Recurring software and services revenue, including BlackBerry Silence, was above 90% in the quarter. We are now modeling recovering revenue to be about 90% for the remainder of fiscal 2020. Now moving to our balance sheet and cash flow performance. Total cash, cash equivalents, and investments was $938 million, which increased by $3 million from May 31, 2019. Our net cash position was $333 million at the end of the quarter. Pre-cash flow before considering the impact of acquisition and integration expenses, restructuring costs, and legal proceedings was positive $17 million. Cash generated from operations was $18 million, and capital expenditures were $4 million. That concludes my comments. I will now turn the call back to John to provide our financial outlook.

Thank you, Steve. Based on a comment on this call, our financial outlook for FY20 and for the total company year-over-year non-GAAP revenue growth is in the range of 23% to 25%, driven by a double-digit percentage increase in billings year-over-year. We anticipate BTS and Sidance performance to be in line with the financial outlook we provided in the beginning of the fiscal 2020. We expect the softness in ESS from the retooling of the Salesforce to be offset by growth in licensing. We also continue to expect total revenue non-GAAP profitability for the fiscal 2020. I will now open the call for Q&A. Lisa?

Thank you, and we will now begin the question and answer session. To ask a question, you may press star 1 on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We request that you limit yourself to one question and one follow-up. And our first question comes from the line of Paul Steep from Scotia Capital. Your line is open.

Great. Good morning. Hi. Good morning. Good morning. Could you talk a little bit more about the management changes you made, anything in particular in terms of the leadership at Cylance or other management changes within the organization and, you know, the focus of those changes going forward?

Yeah. So... You know we made a management change by recruiting Brian Palmer, and he's running our IoT division. And he's been bringing a number of executives in. We have moved our head of Americas, I guess, to head of Europe. with an emphasis of obviously the major markets like France and Germany and UK, in addition to expanding our footprint in the Middle East. So we have hired a new sales executive to run Americas, and who's very experienced on more of the entrepreneur, smaller company, I think his last role, one of his last roles was with Lookout. So we are hiring a number of key executives, especially in field marketing for lead generations. And so the list goes on. And, you know, so Brian is recruiting a new team for growth. So that's the number one. On Silance side, we have promoted Daniel Domo, who was the chief operating officer for Silance when we acquired him, to be the president of Silance. Stuart McClure has unfortunately, after the integration completed, has decided to move on. I think, you know, I would have wanted him to stay longer, but he had made a personal decision, which we have to respect. However, the bench there are quite strong, both in sales. A gentleman by the name of Dave Casanola, he actually used to run RSA sales for many, many years. I think he'd been at RSA like 15 to 20 years. It's a very long time. You know, very, very committed to the mission. The engineering team are all intact. You know, the data scientists, the development head, The chief product officers are all staying and working very hard integrating Scilence's business into Scilence's technology with our CTO and our development head. So I feel very comfortable with that. In addition to that, the co-founder of Scilence, Ryan Permis, is now the chief security architect of BlackBerry. So he has actually increased his role And I can't speak for him, but he looks happy. And so that is, you know, bad. I finally got rid of Steve Capelli, so that he couldn't bother me at all. Then I have, obviously, Steve will help out to making sure that we have synergy, really, across different functional units, both in the go-to market and in the kind of the strategic markets. side of the equation. So that, of course, also will include what is other part of the IoT, which is the BTS, I mean, which is the QNX technology. And he continues to manage the licensing program as well as the radar program. So, of course, we got Steve Ray stepped into the CFO job. You know, Steve been with the company for, as I said, five years. I helped recruit him, I remember that. And so, you know, he's very qualified to do the job. And we've been working this transition for a while, as you could tell, by increasing of his, you know, involvement and role in the financial side of the house. So let me see, have I missed anything, Paul? I think that's about it.

That's helpful. The one follow-up I guess I'd have is if we think through the rest of this year for Silance, are you guys still comfortable with the 25% to 30% growth rate that we talked about on the prior call, or is that sort of moved out a little bit?

No, we're still comfortable with the 25% to 30% range.

Perfect. Thank you. Okay. Thank you.

Our next question comes from the line of Paul Treiber from RBC Capital Markets. Your line is open.

Thanks so much and good morning. Good morning. I just want to focus on the billings growth relative to revenue growth. Billings, I think you've mentioned for the last several quarters now, it's been double-digit growth. It seems like a little disconnect versus revenue growth. Can you just elaborate more on billings, perhaps where the strongest growth is in billings, and perhaps maybe on the duration of billings that you're signing, and then maybe more importantly, when you expect that billings growth to translate to revenue growth?

Most of the billing is on annual. I mean, most of our terms of our contract. There are some that are multi-year, but it's not the majority of it.

Okay. And then honing a bit more into the ESS segment, you know, based on my numbers, it looks like, you know, the revenue for ESS is probably down, you know, in the mid-teens maybe. You know, first, is that correct? And then just given, you know, the high mix of recurring revenue that's in your segment, you know, what would the – does it decline stem primarily on the non-recurring side or – Could you speak to the customer renewal rates on the ESS side?

Yeah. Anyway, thanks for the question. When we look at the ESS, your decline numbers are relatively correct in that component. I would not overly emphasize the non-recurring versus the recurring. So they're somewhat balanced in the two. We're looking forward to bringing out the new products and bringing the new team on board, and I think ESS, we can expect after a couple quarters, we'll be back where we wanted it to be.

Yeah, I would say that the weakness of ESS is really on execution. We did not do as well in closing the deal, and I think that might be the familiarity of the new people. with either the customers or just the process of it. I did not look at it from a breakdown of recurring versus non-recurring at all. In fact, we have not wanted the team to do any non-recurring. So today when we talk about businesses, we are talking mostly on recurring.

Okay, that's helpful. I'll pass the line. Thanks.

Our next question comes from the line of Daniel Chan from TD Securities. Your line is open.

Hi, good morning. Hi, Dan. Good morning. Just to drill into this ESS business a little bit more, I just want to confirm, are you seeing any changes in the competitive landscape as you go up for these bids?

Yeah, we see Microsoft being a little bit more aggressive, but we also have new products coming out that we believe Well, I mean, one came out already, the BIS product, and a couple of new products are going to come out in the short term, which is in the next six months. We believe we could be very competitive. So we have to compete, obviously, but we do see some of the landscape changes.

Okay. And then on a related note, any thoughts on VMware's acquisition of Carbon Black and your view of how Silance will compete in your... Yeah, that's really a welcome news for us.

First of all, so for any of you, and maybe none of you, who thought that we paid too much for Silance, we actually paid the lowest multiple of all. Carbon Black, I think the transaction was 2.1, 2.2 billion, somewhere around that number. Common Black is pretty much the same size as Sidense. And we pay $1.4 billion. So that tells you one thing. Secondly, I think the more important, like I said in the script, it really is a good validation of the strategy of this whole endpoint security market, which we are seeing. Customer want one platform now. They don't want multiple platforms. They don't want to do the integration. And they wanted to have anywhere from the MDM all the way to the endpoint security and antiviral software, all in one platform, one console, one agent, one cloud. So we believe that is an advantage of BlackBerry. And obviously, VMware will always be a formidable competitor. Maybe that's a way to say it. And this also helps squeeze out, change the landscapes and squeeze out a lot of the point product player, smaller player. So we absolutely believe the one platform. We see the one platform needs, especially in the big industrial player. And we went there first. So I thought the VMware carbon black thing was quite logical.

Great. Thank you.

Our next question comes from the line of Mayard Um from Matt Corey. Your line is open.

Hey, Mayard. Hi. Hey, Mayard. Good morning. I had a couple questions. In your release, you talked about QNX being at or better than your expectations. And, you know, there's a number of interesting dynamics in the auto industry, right? On the one hand, you benefit from a lot of big secular tailwinds in the market and where your content is growing per vehicle. But on the other hand, The global SAR has been weak globally, and the auto-related names we cover have all been taking guidance down. So can you just help us understand the puts and takes? When you say QNX was in line or better, were your expectations already building in end market softness, or is the content growth story coming in much better than you expected?

It's more the latter than the former. We did not factor in the the number of auto sales down by 2%. But on the other hand, what we have been seeing is more and more, the higher content of each car is now in software. And because we are well positioned, A, first on the operating system side for the safety functionality, and then expanded more into the cockpit and the display and the ADARs, you know, kind of more the application layer. So, and our partnership with all the Tier 1, as well as the chip manufacturers like NVIDIA, the NXP, the Qualcomm. So, as they increase the content of ADAR, ECU, the electronic control unit, in a car. As each of the manufacturers increase the number of software components, that benefits us. So the content increase helps us to move the output up.

Got it. Okay. And then just separately on ESS, it's down year over year, but also looks down sequentially as well. And I'm just wondering if we should expect ESS to remain flat from the Q2 levels until the sales management benefits take hold in a couple quarters, or if you think that the new products that are coming to market, BlackBerry Intelligent Security, et cetera, will help to drive growth in the back half. Thanks.

The current outlook looks like that it's going to uptake a little bit in Q3 and Q4. We're going to see a little bit better second half than the first half, but I will be modest about it.

Okay, and is that just primarily driven by new product offerings?

Primarily driven by new product, but it's really not that. New product always takes six to nine months, the sales cycle, so it's not as much as that as the sales force gets. orientated more correctly and you get more familiar with the account. It's really the time of maturity.

Okay, great. Thank you.

All right, thanks.

Our next question comes from the line of Todd Copeland from CIBC. Your line is open.

Good morning, everyone. Hi, Todd. Hi. Just wanted to get you to look out a little bit farther How much of integrating silence into ESS is required to get that back on track and where you expect it if, in fact, this one platform is the key to winning longer term? So just talk about your thoughts out past the next couple of quarters.

Yeah, you know, we talked about earlier VMware and Carbon Black and the advantage of the platform. You know, obviously, we have to build that one platform. and how tightly integrated the two organizations are, the pros and cons in both extremes, obviously are going to have to be tighter than today. That's for sure. And this is what they – I mean, all joking aside, this is where Steve Capelli needs to work on, although he doesn't want to, I know, but he has to work on that because we've got to make sure that it's efficient go-to-market, And also strategically, it makes us stronger. So I would say, you know, it remains, you know, work in progress. Maybe that's a way to say it. And hopefully in the next quarter or two, we have a much better decision, a much better view of that. And we're going to chat about that then.

Okay, great. Thanks for the call. Sure.

And our final question today will come from the line of James Fawcett from Morgan Stanley. Your line is open.

Hey, James.

Thank you. Hey, good morning. Thank you so much. Good morning. Just a couple of questions. First, when you look at kind of your investment and that kind of thing, how are you allocating resources? I know you're trying to manage to cash flow and earnings, and how are you allocating resources to the different businesses, and how are you prioritizing that? Because I think on top of the ESF, I think one of the things that's a little bit concerning for people is that it looks like Silance has fallen to roughly flat sequentially, and it sounds like you're probably looking for that to improve in the second half of your fiscal year, but just wondering how you're thinking about allocating resources.

Yeah, yeah, good question. Currently, the resources are mainly going to Silance, As you know, they're not making money, but we keep, you know, we do keep increasing our investment there. And obviously, BTS. Those are the main two engines that we're funding the most. And then we recruit the ESS sales force and balancing the expenses there. So those are the kind of – the operating priority. You know, we are spending, we're hiring a lot of people, especially in sales, both in ESS and Silas. We are spending as much as we possibly can, but not losing money. And that's kind of the operating principle or guidelines and keeping a positive cash flow whenever we can.

Got it. And then when you look at the increasing sales effort and hiring that you're doing there, how are you thinking about time to productivity and some of those other metrics, particularly around Silance and the new Spark platform offering? Just wondering how we should think about that ramp and change in trajectory.

On ESS, it's quite traditional six to nine months sales cycle. So for a rep to be fully productive, we will probably take a year because people get in there, learn the principle of the business, the technology behind it, and then we obviously hand them over a pipeline, which included new territories, existing account base, and and so forth, and so that process, when you ram a full person up, is probably gonna take a year. But we will expect to see some kind of progress before that. So somewhere between six, starting in the six months mark, we should be seeing some progress, and then again, that's the kind of the platform, the ESF side, and so forth. On side-to-side, it's a little shorter. probably shorter by a quarter. And the reason is, well, A, that market is growing. There's a lot of demand there. But more importantly, their products are more singular purposes. And especially now, what we're pushing to sell is a managed service solution called the Guard. And the Guard is usually a relatively easier sell than a platform cell because it's a managed service cell. So those are kind of how we factor in and how we picture it.

Great.

Thank you very much. Oh, sure. Thank you.

I would now like to turn the call back to John Chen for closing remarks.

Okay. So thank you for all the comments and the question. So in closing, Although we are all disappointed with the short-term results, there's no doubt. But strategically, we are in a very strong position to win the $22 billion secure IoT software market, as well as the auto market and extension of that. We have great products and a number of new leading-edge products launching in the next six months. In addition to launching these leading-edge products, we're also working on a number of exciting partnership announcement. So stay tuned. We're also investing heavily in our go-to-market. We just spoke about it just a minute ago. And our focus is now all on execution and all on growth. Thank you very much for your time today. I'm sure we're going to talk soon.

This concludes today's call. Thank you for your participation. You may now disconnect.