Joe Greenhalgh - VP of IR and Corporate Treasurer Bracken Darrell - President and CEO Vincent Pilette - CFO.

Alexander Peterc - Exane Tavis McCourt - Raymond James Paul Chang - JPMorgan Andreas Muller - ZKB Felix Remmers - Credit Suisse.

Good day and welcome to the Logitech Second Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. We will be conducting a question-and-answer session and instructions will follow at that time.

[Operator Instructions] This call is being recorded for replay purposes and may not be reproduced in whole or in part without written authorization from Logitech. I would like to introduce your host for today's call, Mr. Joe Greenhalgh, Vice President of Investor Relations and Corporate Treasurer at Logitech..

Welcome to the Logitech conference call to discuss the company's financial results for the second quarter ended September 30, 2015. The press release, our prepared remarks and slides as well as a live webcast of this call are available online at logitech.com.

As noted in our press release, we published our prepared remarks on our website in advance of this call. Those remarks are intended to serve in place of extended formal comments today and they will not be read on this call.

During the course of this call, we may make forward-looking statements, including forward-looking statements with respect to future operating results that are being made under the Safe Harbor of the Securities Litigation Reform Act of 1995.

The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated in the statements.

Factors that could cause actual results to differ materially include those set forth in Logitech's Annual Report on Form 10-K dated June 5, 2015, and subsequent filings, which are available online on the SEC EDGAR database and in the final paragraphs of the press release and prepared remarks from Logitech reporting second quarter financial results for fiscal 2016.

The forward-looking statements made during this call represent management's outlook only as of today and the company undertakes no obligation to update or revise any forward-looking statements as a result of new developments or otherwise. Please note that today's call will include results reported on both a GAAP and a non-GAAP basis.

Non-GAAP reporting is provided to help you better understand our business. However, non-GAAP financial results are not meant to be considered in isolation or as a substitute for or superior to GAAP results.

Non-GAAP measures have inherent limitations and should be used only in conjunction with Logitech's consolidated financial statements prepared in accordance with GAAP. Our press release includes a table detailing the non-GAAP measures, together with the corresponding GAAP numbers and a reconciliation to GAAP.

This information is also posted on our Investor Relations website. The slides that accompany this call include both GAAP and non-GAAP measures and are also available on our Investor Relations website. We encourage listeners to review these items. This call is being recorded and will be available for replay on the Logitech website.

Unless noted otherwise, comparisons between periods are year-over-year and in constant currency. Joining us today are Bracken Darrell, President and Chief Executive Officer; and Vincent Pilette, Chief Financial Officer. I’ll now turn the call over to Bracken..

Thanks, Joe and thanks all of you for joining us. Our Q2 results demonstrate that our innovation engine and commitment to design are delivering with power. Our momentum is strong with Q2 retail sales growth of 12%, our best growth since 2010. Our sales growth was not just exciting, but it was broad based.

We continue to see strong growth across all regions. Asia Pacific grew 26%, the best in nearly four years, albeit on a low compare from last year. Americas grew 9% and EMEA was up by 7%, the strongest in over three years and up by 12% excluding the economically challenged markets in Russia and Ukraine.

And we grew market share in virtually all of our categories and we are entering new ones. Our overall growth category is up by 45% this quarter, as Mobile Speakers, Video Collaboration and Gaming each grew more than 50%.

Mobile Speakers grew 78% and reached a record high sales for a single quarter given – exciting given our annual peak quarter is still ahead of us. This continues to be a great category for us as music streaming service adoption grows rapidly.

With increasingly unlimited amounts of music on your mobile device, if it's a social music experience you want, listening with your friends, then you need a Bluetooth speaker. If you want your music to go anywhere or you wanted at home and on the go, you probably want one of ours.

This explosion of music streaming is still at an early stage and the opportunity ahead of us is big. Video Collaboration grew 55%, another powerful quarter. If the big driver of the Bluetooth speaker category is cloud-based music services, the driver of growth in Video Collaboration is cloud-based video conferencing services.

Cloud-based video conferencing is growing fast and we are uniquely positioned to take advantage of that growth. Small and medium-sized businesses need the video and audio equipment to convert huddle rooms, small conference rooms and more into video conference rooms.

And that's the role our Video Collaboration plays as our conference cams are designed to be compatible with all cloud-based services out there. We are still just scratching the surface of the potential of this new market. Gaming grew 54% in Q2. Our gaming growth was broad-based too with PC gaming sales up by 24%.

PC gaming growth is a secular trend and we have the best-in-class capability to equip gamers with mice, keyboards, headsets and more. Our wheel sales more than doubled, thanks to the recently to the introduced new wheels for Xbox, PS4 and the PC.

The tablet and other accessories category continue to be weak consistent with the decline of the tablet market that drives it. During the quarter we announced some really exciting news, the creation of the first-ever third-party keyboard for the not-yet launched iPad Pro. We created it working closely behind the scenes with Apple.

Our CREATE Keyboard will be the first third-party product compatible with the iPad Pro Smart Connector. You can expect to see CREATE on shelf at the same time that the iPad Pro becomes available. Once again our Profit Maximization category performed well. We delivered low single-digit growth in pointing devices and keyboards and combos.

We demonstrated continued leadership as we gained share across our Profit Maximization categories. Our success here is driven by innovation. Though we've shifted R&D spending dramatically toward growth categories, we've improved our innovation program in all categories, including PC peripherals. They are great technology and better design.

Now Vincent will go through more details on our performance..

Thank you, Bracken. Our performance through the first half proposition us very well to deliver on our full year outlook. We are delivering better than expected results and showing an exciting level of consistency.

Our retail business grew double-digits in constant currency and all three regions grew for the third straight quarter showing very good momentum. Innovative, well designed products are a key driver of these results as Bracken mentioned, but operational excellence is also a key part of our growth strategy.

Cost savings are helping partially offset the impact from the stronger US dollar on our gross margin. We lowered our non-GAAP operating expenses compared to the prior year as we continue to take actions to reduce our infrastructure functions while freeing up capacity for investments in the business.

Said another way, we are cutting cost in the right places and investing back into growth. Let me comment on a few numbers. I will start with gross margin, which was down by 420 basis points.

While the decrease is primarily due to the dramatic increase of the US dollar compared to 12 months ago, about 100 basis points of the decline is the result of artificially high gross margins in the prior year as we left our books open due to last year's delayed filing.

We offset some of the overall decline through our product and manufacturing cost reductions. For example, we renegotiated lower resin prices for plastics used in Pointing Devices. We increased our volume discounts for batteries and metals for our volume speakers. And we implemented enhanced lien manufacturing processes reducing our overhead costs.

In addition to benefiting from our cost savings initiatives, we have also started to see the benefits of the price increases we implemented in Q1. As a result of these actions, we expect to deliver gross margins for full fiscal 2016 at the long-term target level of about 35%.

Our focus on cost extend beyond product cost to operating expense of course and to infrastructure cost in particular, we reduced our infrastructure cost 10% year-over-year to drop over operating expenses by 3% and then invested back two third of that into R&D to drive long-term growth. R&D was up 7% in Q2 and up 8% for the first half.

Let me give you an update on Lifesize. We are pleased with the adoption rate and sales goals of its cloud based offerings. At the same time, we’re shrinking the Lifesize legacy business as planned.

To enable Lifesize to focus exclusively on its cloud-based portfolio, we have implemented the remaining steps in our structuring plan which resulted in a restructuring charge of approximately $5 million in the quarter.

Also as part of this restructuring, we are in the process of implementing a structural separations of Lifesize from the rest of Logitech. Though Lifesize is managing its business with an independent balance sheet and income statement moving forward just like a standalone company. And that will maximize our flexibility ahead.

Our cash flow from operations was $11 million in Q2. Our cash conversation cycle was 39 days unchanged from Q1. Consistent with the strategy that we shared last quarter, our inventory levels reflect several strategic actions. The first relates to new product inventory.

We have a particularly strong product portfolio for the holidays and we wanted to ensure that we have sufficient inventory available for the peak holiday season. The second factor in our higher inventory is executing the operational strategies that we shared with you last quarter to reduce cost.

Now this high inventory reduced spending while by shipping via sea rather than air, we carry more inventory but we have lower logistic cost regenerating a strong ROI. The third factor is that we’re manufacturing more at our own factory than last year as we build more strategic products in-house.

This keeps our manufacturing processes and launch information more private and enables us to tackle more challenging and innovative products that can create longer term sustainable advantage. Looking at our inventory balance going forward. We expect that the incremental inventory for the holidays will decline through the remainder of the year.

Our overall inventory balance will decrease in the second half but remain up year-over-year due to the strategic actions I mentioned. Our cash generation continues to be the foundation of our capital allocation strategy. We are focused on investing in the business and small acquisition as a priority.

Annual dividends and opportunistic share buybacks are also a priority but secondary to sustained growth investments. Consistent with this strategy, in Q2, we paid an $86 million annual dividend and invested $40 million in opportunistic share repurchases. We have $200 million remaining on our current share repurchase program.

And on that note, I’ll turn it back to Bracken..

Thanks Vincent. I’m excited about our momentum. We’re transforming Logitech back into a growth company. We’ve entered the holiday season with a strongest ever product portfolio. Our portfolio is increasingly well aligned with a shift to a mobility and Internet as everywhere world. We’re gaining share in nearly all of our categories.

Our first half performance demonstrates that our strategy is working. We moved R&D resources out of the PC peripheral space and into growth categories. We have a model in place that can deliver growth in a variety of market conditions. And will keep adding new growth engines over time.

We grew our retail top-line double digits in the first half, even as the PC and tablet markets declined. That highlights a transformation in our portfolio and the power of our innovations that can enable us to grow strongly across a range of market scenarios.

One key element of our business model is to develop new categories in the increasingly connected consumer tech world. Projects we can seeds. We’ve done with Bluetooth speakers, we’ve done it with video collaboration, we’ve done with tablet accessories. And in each case, we’ve gone from zero share to become the leader or a leader.

I’m enthusiastic about the newest that we’re bringing to market, the circle portable home connection camera.

This amazingly easy set up and use in home camera, and I encourage all of you to buy one, makes your phone a portal into your home, giving you the same security features you expect from an in home camera, but with software that enables you to feel almost as if you’re at home with your family wherever you are.

While this is a new market for us and will take time to build, we bring a strong combination of hardware and software engineering expertise and deep consumer insights to this party. That brings me to our outlook. We started the year targeting fiscal year ’16 non-GAAP operating income of $150 million and constant currency retail sales growth of 7%.

I don’t intend to revisit our annual targets often and I won’t today, but I will say we have strong momentum coming out of the first half of the year into our biggest quarter. I’m very excited about our progress. We’ve nearly completed our exit from OEM and we’ve taken further actions to restructure and prepare LifeSize for the new world.

We’re laser focused on strong, sustainable growth over the long term. And we have a strong portfolio of product categories, including new ones that we can grow into. In other words, we’ve just started to become the growth business we can be. And with that, Vincent and I are available now to take your questions.

Please follow the operator’s instructions..

[Operator Instructions] Your first question comes from the line of Alexander Peterc from Exane. Your line is now open..

Yes. Hi and thanks for taking my question. I have a few actually lined up and thank you.

The first one is on guidance, which now looks very conservative statement, we don’t want to change it too often, which I understand, but it looks like you’re going to hit 7% like for like growth for the full year, by achieving just shy of 4% in fiscal Q3 and Q4, so that’s a big slowdown from what you just reported and comp zones appear to be that more challenging in the second half of your fiscal year, so if you could clarify what testifies this quotient, will you just prefer to be on the side of something a bit more conservative and the same goes probably for your non-GAAP EBIT guidance? And then on categories, one, on speakers, how is the ROLL doing, is that delivering as we expected and is the reacceleration down to the phasing of your new product releases, I understand that ROLL was a bit delayed, is that the cause here and on the iPad keyboard, do you expect the Pro to make a significant change in the category and really change the ASPs as well and drive this category back into growth and I was just wondering a bit more provocative, you can’t really predict when your tablet accessory and other will be back in growth, would you move it to profit max perhaps? Thank you..

Okay. You covered a lot there, so let me start with guidance.

I said it a few minutes ago, we saw the target for the beginning of the year and I really never intended to revisit them often and I don’t want to revisit them now, the biggest half of our years ahead of us, the third quarter is the biggest, so it’s just in my -- in our view, it’s not time to revisit our guidance.

On the speakers category, we rolled out UE ROLL, we’re rolling out UE ROLL, all over the world, it’s very early to even talk about it, what I can say is I think the three products we have in our music portfolio are the best three products in the category, and it’s a humble comment, not so humble comment from a relatively humble guy, but I feel terrific about all three of them.

On the iPad Pro, it’s impossible for me to really predict what will happen to the category. We take a pretty conservative view of that category going forward, the tablet category, tablet accessories category, so we’re not projecting a big change in the direction of the category. We’re really excited about the product.

We’re really excited about the iPad Pro and what it can do and we think we’ve got something that really complements that category really well and we’re especially excited to have worked kind of behind the scenes or absolutely behind the scenes with Apple. That was really an exciting project for us..

Okay. Thanks a lot..

Thank you..

Your next question comes from Tavis McCourt from Raymond James. Your line is now open..

Hey, thanks for taking my questions and great start to the year. So a couple of questions on a lot of these currency swings.

I know you kind of give us the top line impact, but I was wondering given your assets in China, did or will the Chinese devaluation have any material impact on the business or cost structure?.

Hey, Tavis, this is Vincent. So the 3% depreciation in the Chinese currency may have a slight positive impact, so it did not impact Q2, it will be more of Q3, Q4, and it’s somewhat minimal, still has to be worked as we renegotiate with all of our vendors, some dealing in Chinese currencies, others dealing in US dollars.

So definitely it’s a help against the US dollar appreciation, but not large enough to offset the US dollar appreciation. .

Okay. And in terms of cash flow, you gave a little bit of a guidance around inventory, so I go that. But I guess, if you’re looking at a full year cash flow from operations or free cash flow, it’s been reasonably weak in the first half of the fiscal year. I presume it gets better in the second half.

Are there any other balance sheet categories outside of inventory that we should expect to help out in that regard in the next two quarters?.

No, when you look at the cash flow, yes, you’re correct. So first half is weaker than the first half in many years, but there was the trend for Logitech the last two years, it was a bit more balanced. And this year with the inventory increase in the first half, as you know that consumed working capital as we work inventory down in the second half.

That will free up excess cash flow. CapEx has been in the range of around $45 million to $50 million, very stable for many years. Last year, it was exceptionally low at $40 million, this year will be on the high-end around $50 million and that’s more about tooling as we bring more in-house manufacturing.

But otherwise nothing really special and it’s all about the inventory. I expect the second half cash flow to be much stronger. .

Great. And then Bracken, a kind of a broad pricing question for you. If I look at your sell-through and sell-in trends, it looks like there has been average ASP increases and very substantial ones, if you look at in local currency terms across almost all the product categories.

And then I am wondering how much of that is the impact of maybe more temporal new products coming out of higher price points versus specific policies on your part to try to raise prices on products where your market share is relatively high?.

Certainly a mix, Tavis. I mean, we’ve done both, so we raised prices across most of the geographies where we sell in local currencies that have weakened relative to dollar. So there is – you’re seeing that impact there and you’re seeing the impact in our P&L and you’ll probably see a little more over time.

On the mix side though, as you call it out, and that’s little bit true. Our portfolio is getting more and more premium.

It’s not that we are not innovating at all into the portfolio, we are just having a lot of success in products like our Music products, like our Video Collaboration products, we have extremely high price points for relative to our average. .

Okay. Thanks a lot. .

All right. Thanks, Tavis. .

Your next question comes from Paul Coster from JPMorgan. Your line is now open. .

Hey, thanks. This is Paul Chang on for Coster. Thanks for taking my question. First on Mobile Speakers, certainly [ph] has been lumpy on a quarterly basis, what’s driving the volatility there, whether it be from shipping, channel strategy et cetera? I assume that UE ROLL is solid contributor this quarter..

Yeah, that has been extremely strong all the way through – consistently through every quarter really. We had a – we are up 78% this quarter as we called in the script, and you can see the document. The Bluetooth speaker category has been very strong, we have been consistently growing share around the world in that category.

And you’re always going to have some peaks and values based on the product launch there as you have, but we just extremely good about our performance there in the portfolio as I said earlier. .

Okay.

And then for the new Logitech Circle, first can you confirm what category this would be classified under, is that going to under Video Collaboration?.

Sorry, this is Vincent. So when we launch, as we said, we first want to start small, test the market and get ready to scale fast. Similarly, it was what we did with the Video Collaboration group that was initially in the webcam configuring. The Circle will be in the Video Collaboration current category.

The impact obviously on the quarter was zero for second half, which we’ll still be expecting to be small and really a launch for ramp up for FY17. We’ll see how that goes, but at this point, in second half we report revenues part of Video Collaboration..

Okay.

How big do you think the TAM is in your view and how is product differentiated from Dropcam?.

Okay, I will answer the second first. So the product is different from Dropcam in several different ways. One of them, for example, is we essentially have a way of capturing the – in 30 seconds your days, that isn’t time lapsed, it’s actually pattern recognized.

So time lapsed 30 second picture of a day, for example, you would get -- if in a normal room you would have 80% nothing moving and 20% of something moving and if you buy one of our cameras and I would encourage you to do that, you will get basically 95% or 100% of things moving, because we recognize some things that are actually happening in the room.

So that’s one key difference than the others. On the total addressable market, it’s really early to say. It’s a market that’s on a very interesting growth path we think regardless of what a defined market would look like.

We think there is going to be secular trend and more and more people wanting to be able to communicate into their homes via all means including this kind of camera. So we feel really excited about the potential of the overall market. I couldn’t tell you what the TAM is, but I think we have expectations that one day it will be very large..

Got it.

And then on the recorded video, I noticed that you’re offering free 24/7 footage, this trial with possible monetization, I know Dropcam charges around $10 a month?.

Well, stay tuned on that. Obviously we are very aware of how this market works and we are very attracted by the idea of monetizing in other ways the services we offer. I would add one other thing about our cameras that’s different from Dropcam, it’s portable. So you can pick it up and move around it.

You can pick it up, walk into another room and show a piece of art work that he or she is doing to their father or mother who is far away, so anyway we are really excited about this category and on the monetization, stay tuned..

Okay, thanks..

Thank you. Thanks, Paul..

[Operator Instructions] Your next question comes from the line of Andreas Muller from ZKB. Your line is now open..

Yes, thanks for taking my question. Good morning..

Good morning..

What will be the overall currency impact on gross margin this quarter and what other variables will drive the gross margin in Q3? And then the other question will be, what kind of attach rate do you expect for the Keyboard Case of iPad Pro?.

Let me answer first the gross margin, Andreas. So on the gross margin side, let me first go back to the top line. We have about 7 points of currency impact on the global basis on the business on local currency versus US dollars reporting. That has been the case for two quarters.

It will still be, if currency stays at where it is today, no change, it would be 6 points in Q3 and it will drop to 2 points in Q4. So you can see that past December the currency impacts will become much more minimum. At this point in time, the flow-through is at the highest level, which means that we hedge on about a fourth months run rate.

We’ve lost the benefit of past hedging of prior purchases and the gross margin impact on the year-over-year basis is pretty much earlier.

When you look at gross margin moving forward, you know that Q3 and Q4 normally weaker than the first half, but for the full year we should be around 35% and some of the offset to natural currency impact are the cost savings and price increase that I have mentioned..

And on the attach rate, we obviously don’t have any official number. We quote on that, I guess the perspective of that is, what we see in attach rates in iPads so far is the smaller they are, the lower it is, so the larger they are, the higher it is.

So I would expect the attach rate for the iPad Pro to be significantly larger than the larger iPads today which are running in between 10% and 15%, but it is really hard to say what it will be..

Okay. And last question.

What’s the typical buyer of UE BOOM 2? Is that – do you sell it mainly into the existing customer base or into new customers there?.

We grew – I will repeat it again, because it’s fun to say. We grew 78% this quarter and honestly we have such a low penetration of the number of people who could buy UE BOOM, but it’s almost all incremental buyers. That said, you got a lot of people because of the features we have that are buying multiples.

So I would guess – we guess that we are going to have people buy more. The existing people buy more as well. The double up feature which is soon to be X up. So, double up means you can get -- you can pair one with the other one of the plain stereo, we’re soon going to be able to pair one with many and I want to give a number 20 plus.

I doubt if you all people buying 20 plus but you’ll certain have some people buying a lot more than two. So there are opportunities on both sides of that ball, I’m really excited about the potential and we’re going to keep upgrading that product for the existing users too so they get benefits of buying multiples..

Okay, thank you..

Your next question comes the line of Felix Remmers from Credit Suisse. Your line is now open..

Thank you for talking my questions. I have three of them, one on cash flow. Assuming that you would hit your non-GAAP EBIT guidance, what can we expect in terms of operating cash flow given the rather subdued performance on this side in the first half? Then the second question would be on Asia.

Just wondering given the strong performance there, if you had any strategic changes to year-ago or just the key reasons why that is so strong? And then on Lifesize, I mean this restructuring sounds very expensive to me.

Can you share a bit more color on what you actually do, I mean, $3 million, $4 million is more just to run it on a separate P&L sounds a bit expensive here?.

Let me start on cash flow and Lifesize first. So, on cash flow, as you said, first half weaker, second half stronger. Normally the Company has been running on cash flow at around between net income and operating income.

We don’t give a guidance per se on cash flow but you can triangulate on that and then you need to just factor in your mind that we will run inventory slightly higher than where we finished last year, we’re around $250 million we say that’s too low for our strategy today. But we will be below $300 million in inventory as we exit the year.

So you can pick the number there. Capex, as I mentioned is slightly higher on the high side of our range but within the range. From there you should be able to derive a new model; but again, we don’t intend to guide on cash flow per se. Lifesize, we’ve actually accelerated the repositioning of the business on its cloud business.

The first part of the plan was to milk the legacy business and fund the acceleration of the cloud. The cloud is having a very strong start after 15 months over 2,500 paying customers. And the legacy business has been now more of a distraction. So we still offer it to customers but we’re not pushing it anymore.

The restructuring that we’ve implemented is a pure headcount reduction to reposition the skill set entirely focus the employee base to make the cloud successful, which as I mentioned is good traction. Very little of the restructuring is just per se for the separation.

The separation is more legal contractually to enable them to have their balance sheet and income statement which will then enable us to make more broad range of decisions that we need to make to continue to accelerate the cloud..

On your question on Asia, Felix, couple of things. So, first we did have an easier compare in Asia which I mentioned in the -- when I was going through the opening. But beyond that we really do have a great performance in Asia right now and I think it’s driven of few things.

One is, our executions continue to improve there and we’ve seen each, we call them clusters, but each of the clusters across the region doing better and better. Our growth businesses are doing really well in Asia. Video collaboration has a big, big opportunity out there.

Music has done exceptionally well, we’re -- we’ve gone from nowhere to be the market leader and in some big markets out there. And gaming continues to be -- it’s a very big market for gaming. So it’s just -- we’re well positioned in Asia and I think we’re executing well..

Okay, thank you. So maybe one follow-up, just on how many headcounts do you reduce in Lifesize then, if you -- the most of 22 to 25 million is spend on headcount reduction.

Can you share that with us?.

Yeah, so the restructuring covered three pieces for the overall company. The infrastructure function on the retail business in order to accelerate the investment in growth. The exit of OEMs and then the refocus of Lifesize as a standalone cloud-based company.

The headcount reduction in Lifesize which you mentioned with the restructuring amount you mentioned is around 100 heads..

Okay, thank you very much..

Your next question comes from Tavis McCourt from Raymond James. Your line is now open..

Hey, thanks.

Just a follow-up on the Asia question, the sell through was strong, but it looked like there was also the sell-in growth was much stronger than sell through this quarter, was that, I guess any commentary on channel inventory there, was it we coming into the quarter or any commentary around that?.

Yeah, Travis. This is Vincent. We look at that obviously very closely. If you go back to a year ago, sell-in in Asia was minus 1%, sell out was plus 5%, and so you have an effect of compares.

When you look at total company first week on the hand, backward looking is flat year-over-year, forward-looking is actually down, so improving and that’s really based on how we look at the business moving forward. In dollars, it’s just slightly up. So very well positioned for the total company.

Asia is actually similar to the global trend here with flat backward looking, slightly down forward looking. So no issue on that side, neither in Asia nor in the other regions..

Great. Thanks very much..

Thank you. It appears there are no further questions. At this time, I’ll turn the conference back over to Mr. Darrell for closing remarks..

Okay. Well, thanks for joining us on the call today. We have strong momentum. If we execute like we’re capable of, we’re standing at the doorway of a new Logitech growth period. And my entire team and I fully intend to engage with enthusiasm, operational excellence and passion the exciting opportunity in front of us. Thank you..

That concludes our conference call for today. You may now disconnect. Thank you..