Earnings Call: Q2 2021

Jul 27, 2021

Welcome, everyone, to the MPS Second Quarter 2021 Earnings Webinar. Please note that this webinar is being recorded and will be archived for 1 year on our Investor Relations page at www.monolithicpower.com. My name is Genevieve Cunningham, and I will be the moderator for this webinar. Joining me today are Michael Singh, CEO and Founder of MPS and Bernie Blagen, VP and CFO. During this webinar, we will discuss our Q2 2021 financial results and guidance for Q3 2021 followed by Q and A session. Analysts, you are currently muted. If you wish to ask a question during the Q and A session, please click on the Participants icon on the menu bar and then click the Raise Hand button. In the course of today's webinar, we will make forward looking statements and projections that involve risk and uncertainty, which could cause results to differ materially from management's current views and expectations. Please refer to the safe harbor statement contained in the earnings release published today. Risks, uncertainties and other factors that could cause actual results to differ are identified in the Safe Harbor statements contained in the Q2 earnings release and in our SEC filings, including our Form 10 ks filed on March 1, 2021, and our Form 10 Q filed on May 10, 2021, which are accessible through our website, www.monolithicpower.com. MPS assumes no obligation to update the information provided on today's call. We will be discussing gross margin, operating expense, R and D and SG and A expense, operating income, interest and other income, net income and earnings on both a GAAP and a non GAAP basis. These non GAAP financial measures are not prepared in accordance with GAAP and should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A table that outlines the reconciliation between the non GAAP financial measures to GAAP financial measures is included in our earnings release, which we have filed with the SEC. I would refer investors to the Q2 2020, Q1 2021Q2 2021 releases as well as to the reconciling tables that are posted on our website. Now I would like to turn the call over to Bernie Blagan. Thanks, Jen. MPS achieved record second quarter revenue of $293,300,000 15.3 percent higher than the Q1 of 2021 and 57.5% higher in the Q2 of 2020. This broad based year over year revenue growth was a result of our diversified growth strategy, Technological Innovation and Investment in Production Capacity. Turning now to our Q2 2021 revenue by market. Computing and storage revenue of $87,700,000 increased 30.0% from the Q1 of 2021. The sequential revenue improvement reflected increased demand and market share gains for servers and data centers and notebooks. Computing and storage revenue represented 29.9 percent of MPS' 2nd quarter 2021 revenue compared with 34.4% in the Q2 of 2020. 2nd quarter consumer revenue of $76,100,000 increased 14.9% from the Q1 of 2021. The sequential quarterly revenue increase reflected earlier than normal sales of gaming console products. Consumer revenue represented 25.9 percent of MPS' Q2 2021 revenue compared with 25.6% in the Q2 of 2020. 2nd quarter automotive revenue of $48,700,000 increased 8 point 5% from the Q1 of 2021, primarily due to increased sales of infotainment products. 2nd quarter 2021 revenue was up 173.9% year over year. Automotive revenue represented 16.6 percent of MPS' Q2 2021 revenue compared with 9.5% in the Q2 of 2020. Q2 2021 industrial revenue of $43,300,000 increased 8.9% from the Q1 of 2021, reflecting increased sales of products for power source applications. Industrial revenue represented 14.8% of our total 2nd quarter 2021 revenue compared with 14.3% in the Q2 of 2020. 2nd quarter 2021 communications revenue of $37,500,000 was up 3.9% from the Q1 of 20 21. Most of this sequential revenue increase was due to higher product sales for networking and wireless applications. Communication sales represented 12.8 percent of our total Q2 2021 revenue compared with 16.2% in the Q2 of 2020. Our sustainable above market growth is based on the following. We have and are continuously investing in the expansion and diversification of our supply chain. We accelerated the release of advanced products and solutions based on our new technologies. 3, we have gained increased acceptance of our solutions with 1st tier customers globally and 4, we continue to diversify and support on a wider number of end product applications. With our planned capacity expansion in place and as we release more parts into production, We are well positioned to accelerate our future revenue growth. Moving now to a few comments on gross margin. GAAP gross margin was 56.0 percent, 60 basis points higher than the first quarter of 2021 90 basis points higher than the Q2 of 2020. Our GAAP operating income was $60,600,000 compared to $46,100,000 reported in the Q1 of 2021 and $28,000,000 reported in the Q2 of 2020. Non GAAP gross margin for the Q2 of 2021 was 56.3%, up 50 basis points from the gross margin reported for the Q1 of 2021 and 60 basis points higher than the Q2 from a year ago. The increase in non GAAP gross margin as a percent of revenue reflected lower proportional overhead costs. Our non GAAP operating income was $94,900,000 compared to $75,800,000 reported in the prior quarter and $53,000,000 reported in the Q2 of 2020, representing a 70 and we expect year over year increase in operating income. Let's review our operating expenses. Our GAAP operating expenses were $103,600,000 in the Q2 of 2021 compared with $95,000,000 in the Q1 of 2021 $74,600,000 in the Q2 of 2020. Our non GAAP second quarter 2021 operating expenses were $70,300,000 up from the $66,200,000 we spent in the Q1 of 2021 and up from the $50,700,000 in the Q2 of 2020. The difference between non GAAP operating expenses and GAAP operating expenses for the quarters discussed here are stock for the full year of compensation expense and income or loss on an unfunded deferred compensation plan. For the Q2 of 2021, Total stock compensation expense, including approximately $885,000 charged to cost of goods sold, was $32,100,000 compared with $28,600,000 recorded in the Q1 of 2021. Switching to the bottom line. 2nd quarter 2021 GAAP net income was $55,200,000 or $1.16 per fully diluted share compared with $45,400,000 or $0.95 per share in the Q1 of 2021 $30,200,000 or $0.64 per share in the Q2 of 2020. Q2 non GAAP Net income was $86,500,000 or $1.81 per fully diluted share compared with $69,500,000 or $1.46 per share in the Q1 of 2021 $50,600,000 or 1.08 and $0.08 per share in the Q2 of 2020. Fully diluted shares outstanding at the end of Q2 twenty 21,000,000 or $47,800,000 Now let's look at the balance sheet. Cash, cash equivalents and investments were $672,900,000 at the end of the Q2 of 2021 compared to $641,600,000 at the end of the Q1 of 2021. For the quarter, MPS generated operating cash flow of about $96,900,000 compared with Q1 2021 operating cash flow of $77,100,000 2nd quarter 2021 capital spending totaled $39,300,000 Accounts receivable and ended the Q2 of 2021 at $77,600,000 representing 24 days of sales outstanding, which was 6 days lower than the 30 days reported at the end of the Q1 of 2021 and 3 days lower than the 27 days reported in the Q2 of 2020. Our internal inventories at the end of the second quarter of 2021 for $177,300,000 up from the $175,200,000 at the end of the Q1 of 2021. Days of inventory of 125 days at the end of the Q2 of 20 21 or 16 days lower than at the end of the Q1 of 2021. Historically, we have calculated days of inventory on hand as a function of the current quarter revenue. We believe comparing current inventory levels with following quarter's revenue provides a better economic match. On this basis, you can see days of inventory of 117 days at the end of the Q2 of 2021 or 7 days lower than the 100 and for 4 days at the end of the Q1 of 2021 and 2 days lower than the 119 days at the end of the Q2 of 2020. I would now like to turn to our outlook for the Q3 of 2021. We are forecasting Q3 revenue in the range of $309,000,000 to $321,000,000 Gross margin on both a GAAP and non GAAP basis is expected to include a one time benefit from a with $4,000,000 litigation settlement. Including this benefit, GAAP gross margin will be in the range of 57.3 to 57.9% and non GAAP gross margin will be in the range of 57.6% to 58.2%. Excluding this one time event, non GAAP gross margin will be in the range of 56.3% to 56.9%. Total stock based compensation expense should be in the range of $31,200,000 to 33 point $2,000,000 including approximately $950,000 that would be charged to cost of goods sold. GAAP R and D and SG and A expenses should be between $104,100,000 108 at $100,000 Non GAAP R and D and SG and A expenses will be in the range of $73,900,000 to $75,900,000 Litigation expense should range between $2,300,000 $2,700,000 Interest income is expected to range from $1,000,000 to $1,400,000 fully diluted shares to be in the range of 47.4 to 48,400,000 shares. In conclusion, with our planned capacity expansion in place and as we release more parts into production, we are well positioned to accelerate our future revenue growth. I will now open up the webinar for questions. Thank you, Bernie. Analysts, I would now like to begin our Q and A session. Our first question comes from Tore Svanberg of Stifel. Tore, your line is now open. Yes. Thank you, Michael. Bernie, congrats again on another strong and record quarter. I was hoping you could update us on your capacity plans. I know you've done a pretty good job here in the last 18 months. Your inventory seems to be in good shape, perhaps a bit at the lower end. But yes, maybe you could help us to understand a bit more what you specifically are doing on the capacity side. Thanks, Tori. Our capacities, as always, in the past 3 or 4 years, and we keep expanding. And now we continue that. However, We do have capacities of over $2,000,000,000 before the middle of next year. So we have enough capacity for us to grow. And then now we have just qualified more product and released to productions and ultimately in our customers' hand. And at the expense of repeating ourselves, Tori, you recall that last year we brought up a 12 inches fab and this year we have brought up 8 inches fab, which is already contributing to inventory. So in both cases, Very good. Thank you for that. And your cash balance has doubled here the last couple of years, And it's now at R670,000,000. Obviously, it's a luxury issue to have. What do you intend to do with that cash? Because obviously, you don't need that much. Do you plan to return it more back to shareholders? Are you potentially looking at M and A? The reason I'm asking this is because It's so high now, right? I mean, I know historically you've grown your business organically, but it's so high now that I just have to ask the question what you intend to do with it. That's a good question, okay. As a company, I keep saying that we're transforming the company from a semiconductor to more solution providers. And so We can utilize the cash much better than we can in the past. And the strategy is still again, we will buy in a tuck in Technology companies, which comparable to NPS revenues, So on the other hand, we are also consistently raising dividend and that's our strategy, but we are not excluding buyback shares. Great. Thank you very much. I'll be disciplined and jump back in line. Thank you. Yes. Our next question is from Quinn Bolton of Needham. Quinn, your line is now open. Hey, guys. Hope you can hear me, but let me echo my congratulations on the strong revenue and the very nice Gross and operating margins. Bernie, I guess you teased us there at the end of your script saying that you've got the capacity now to support An acceleration in revenue growth. If I look at revenue last year, you did about 35% growth. Looks like this year, You might do better than that. I'm just trying to interpret when you talk about an acceleration in revenue growth. What should we read into that? Yes. I think that you're familiar with our model, which is to outperform the Industry by 10 to 15 percentage points. And obviously, that's a model, that's a guideline. And there are certain periods where we have the right factors both strategically as well as from a market perspective that have allowed us to do better and sometimes not as well as that model. So for example, if you look at last year's results, You could argue that at 34.5% growth that we ceded the market, which was right about 5% to 8%, depending on what you're looking at, by somewhere in the neighborhood of 15 percentage points, 17 percentage points. And so we look at that as well above our model. In the current year. Obviously, we only guide to Q3, but it's not unrealistic to expect that within the range of possibilities that we could match that performance or in fact do just a little bit better. So, what we're trying to observe here is that in this 2, 3 year period, We're actually benefiting from a lot of factors that have us exceeding what our normal model is. Great. Thanks for that Additional color. Bert, I also wanted to ask, on the compute and storage business up 30% sequentially. I think you mentioned that it was share gains in both servers as well as notebooks. On the notebook side, I thought you already had pretty high share at the high end of the notebook market. So I'm wondering if you could comment, are you starting to see share gains and maybe more mainstream or even low end or Chromebooks on the notebook side and is there any notable areas of share gains on servers? Thank you. Yes. So we do have some share gain Possible in the notebook market segment. As our technologies advanced and at which the lower the cost, our die size became much smaller. So the cost The lower costs allow NPS to enter the lower notebooks segment. And then as far as server, We've been fairly consistent in articulating our strategy as far as being able to Grow our market position with each succeeding next generation, particularly Intel and AMD Not limited to that though, but also on 48 volt and with GPUs. So it really expresses the point that We're branching up in share gains within the Intel family, but also branching out into these other opportunities. Great. Thank you and congrats again. Thank you. Our next question is from Rick Schaeffer of Oppenheimer. Rick, your line is now open. Thank you, and I'll add my congratulations. You guys just kind of keep amazing everybody. And I think I'll ask one more capacity question, if that's okay, and it's coming from a spending kind of standpoint. Can you, Bernie, maybe remind us What the outlook for kind of spending just as a general rule as a percent of revenue maybe starting next year once All the new capacity is installed. And I mean, I think you're getting so many questions because I mean, everybody sees the kind of growth you guys are putting up. And it's awesome that you have 2,000,000,000 in capacity I know on board by this time next year, but at this rate, it's only a couple of years, right, where you're going to be bumping your head on buy. So I'm curious because how soon would you have to look to begin ramping incremental capacity again? And what might that impact be on spending? I'm curious what like just hypothetically, In 2 years, 3 years' time, if you're at $2,000,000,000 top line, like what would gross margin look like, for instance? Thank you, and good question. Something that's really important to comment on here is that a lot of companies and a lot of analysts and a lot of investors are focused on capacity as if this is a new aspect of the semiconductor business. In fact, capacity is something that we have been managing for the 10 years that I've been hearing before that. It's an integral component to our growth strategy. And so The way that we've been doing it is sequentially adding new fabs and also assembly houses and testing capacity alongside of that to accommodate to be in front of what are expected revenue growth. So while we have made public comment on the fabs that we've invested in to date, We're still continuing on with ongoing relationships in order to secure more Yes. As I said earlier, we keep expanding, we will never stop, But sometimes faster, other ones, other times slower, okay. Other than the capacities, physical capacity itself, We have to increase a lot of headcounts and NPS is very, very lean. And So we will hire now we are hiring a lot of people. Thanks. Sorry, I was having some trouble on my end. Thanks, Michael, and thanks, Bernie. A quick question on auto, if I could. I mean, by my math, it's on track to maybe grow sort of in the 80% or better range this year for you guys. I mean, I'm curious how much of that is being either directly or indirectly limited by supply. And if you could give a sense of what growth could be Or talk about maybe demand that's pushed and how that ultimately would show up in the model, say, next year. I don't know if you Maybe quantify or talk about your auto backlog and maybe where it is today? Maybe Bernie can. This year, you said that you mentioned that whether the Automotive product is limited by the capacities. And The answer is not as much as other segment, because Automotive is a company that gave us a long lead times. And so we prepared last year. The last year didn't Our customer didn't consume that many of our products, okay, and so it all translated to this year's. And so we'll be able to ship them now. One of the aspects of automotive that's getting a lot of attention in the press has to do with the fact of electronic component shortages that are shutting down plants or limiting Their ability in order to kit a car and put it assemble it. And as Michael just said, We're actually not capacity constrained there. We are meeting all demand from them. And what's been interesting is one of the reasons that automotive got into this bind is because they were working with the just in time inventory model. And I think that they've learned from that that when the parts The electronic components are available that they will stock them even though they don't have a complete kit to build the car. Now in our conversations and feedback that we're getting is they're actually only trying to satisfy real demand, but that is the timing of when the build plan, when they'll have the complete kit that they can then build the cars. So it's something that we want to monitor because there's been no change in the ordering pattern or in our shipment schedule versus expectations because of the other limitations in automotive. Yes, I might as well add it. Okay. About 1 year and 1.5 years ago, our inventory was at all time high. And that was one of the reasons that why we do that because we are a newcomer in automotive industries. Even though with this type of current revenues, we're still in a very, very littles on a market percentage of a market. And so as it clears, as a newcomer and you don't want to upset the customers, okay, and you don't have a product. So As all these like what we do to all these key customers, we have inventory, even though they have a Don't have a clear forecast. And so now has really benefited us and we gained lot more design win activities and because our competitor cannot ship a product. Okay. Got it. Our next question is from Ross Seymore of Deutsche Bank. Ross, your line is now open. Our next Question is from William Stein of Truist. William, your line is now open. Great. Thanks for taking my question. I hope you can hear me. With regard to first sort of a maintenance question, with regard to your capacity and inventory, which you've already Explain quite a bit about on this call. Are you supply constrained at this time? Are you able to meet all the demand, whether it's Upside or maybe customers stretching and trying to build a bit of inventory or are you in fact capacity constraining and are lead times Extended as you're communicating them to customers. And then I have a bigger question a more sort of strategic question after that. Yes. Let me explain it that way, again. We have less capacity constraints that compared like half year ago also. And However, as a customer when you call after you qualify all these new facts and we have a month or couple of months delayed of qualifying these products. And to qualifying the fab, it's not exactly a science, Okay, I mean, you use different supply, different equipments, okay, I mean, different materials and all the problem all the these issues comes to have an effect on how you qualify products in the end. So and at this time, okay, we just have to release a lot of new product not Existing product from different fabs. And so it's kind of a To answer your question, Yeri is the kind of a constraint. We have a lot more orders and we couldn't fulfill. So that gave me and but just only couple of months late. And again, what we're trying to do here is Make sure that we're servicing real demand and not building up inventory either in the channel or on our customer shelves. So what we've done is we've actually have very transparent relationships with our customers so that we make Great. Thanks. And then the follow-up, if I can, or the more strategic question. Michael, you referred to this transition from a semi company to a technology Solutions company and it's something I've written about, about specifically the transition from semi devices to modules. Any quantification around this and perhaps it relates to the e commerce Strategy as well, any update in that area would be very helpful. Thank you. Yes, thanks for asking for that question. Now it's overwhelming by The revenue growth and the company, but not only from analysts, but from our side, the company inside the company is overwhelming by The revenue growth, the allocations and the product allocations and a lot of strategic things as less pronounced than now. But the module you're absolutely right. Module business It's for a solution as a solution, transforming to a module company as we transforming We're transitioning from semiconductor to a solution company. And The e commerce, we have a teams and we finally we have organized like a product line. And I know the activities in the last quarter or so It's called Jupo. And so the revenue is still small, but is in the 1,000,000 of dollars, It's more than $1,000,000 somewhere $30,000,000 $40,000,000 With the modules and Yes, with the module and the service air. And it's growing as I recall in about 5 years ago 3 years ago, it's almost 0. Yes. And 4 years ago, almost 0, and we started that. And so, we will continue to focus on that. And so that I truly believe that that's our future. Our next Question is from Joshua Buchalter of Cowen. Joshua, your line is now open. Hey, guys. Congrats on the results and thanks for taking my question. Gross margins in both the print and the guide were meaningfully higher than your usual 10 to 20 basis point trajectory. Can you elaborate on the key drivers of the leverage there? And I guess speak to the sustainability. Was it driven by mix or something on the cost side getting wafers through the recently ramped fabs. Thanks. Sure. I think that we've discussed in the past that again, it's our model is that we want to be able to grow gross margin at 10 to 20 basis points sequentially over the long haul. And we've demonstrated very good consistency in being able to do that. But much like I was describing before, this is an unusual period of growth for the company, both in terms of how fast the revenue is growing. And then obviously, as we described in the narrative, It was that the overheads is not which would be like direct spending or inventory provisions or anything like that is not growing at the same rate as the revenue growth. And that's where we're getting the near term leverage. As we look out, obviously, we don't want to create an expectation that we're going to be able to grow at the same rate. But by the same token, we have established another floor level for what we expect That's helpful. Thank you. And then also on the model, I guess, you mentioned that consumer in consoles was a bit accelerated versus your normal seasonality. Can you remind us what you would expect the shape of the console business to look like in the second half? And maybe just Give us some clues on revenue growth by segment. Thank you. Sure. Go ahead. I don't know if we call it normal. I can't think of a normal anymore. Regarding to our console Yes, we win a lot of design and win an X design. Okay, I mean, I think the business continues and again, I think you have a better judgment than us what's the seasonality now for the parcel. I think that Michael makes a very strong point there is that We've had so many puts and takes and different lines of businesses that have been added that the rule of thumb is not as applicable as it might have been back in 2018 or 2019. What I would comment on is that we believe that we are optimizing across all of our different end markets. And again, it's really the strength of the model is in the And whereas a lot of the traditional seasonality would have been tied to Consumer, for example, now we have a much higher percentage of our business that is tied to computing, automotive and industrial, and they don't necessarily recognize the same level of seasonality. But then to sort of complete the question, I think if you look at the near term growth, obviously, the current year has benefited significantly from automotive and compute storage in particular, and we believe that going forward, automotive along with communications Our next question is from Tore Svanberg of Stifel. Tore, your line is now open. Yes, thank you. I just have a few follow-up questions. First of all, I have a question on your ASPs, Which obviously tied to your revenue growth. So now that you are sort of growing the 50% range, How much of that is units versus ASPs? Yes. I would say, if you look at last year and last year is representative of what we're doing in 2021 is of the 34.5% growth, 25% of that was tied to volume, 10% was tied to price. And I think when Michael talks about the solutions business, You're looking at previously selling an individual piece of silicon for $0.20 to $0.25 and now depending on the module, we can get between $1 to $3 And what we're looking to be able to do is design Complete integrated solutions for different end applications where those will be able to achieve for the total cost for that solution can be somewhere between $60 to $100 So there is the ASP on the individual component, but it's more importantly, it's having that attach Very good. And talking about systems, how is your motor business doing? I know That's probably the highest ASQ products you have. So how is that business going? It's doing well, but The rest of our companies grow much faster, so it's still small. And you can't break out a percentage yet. And then But I think that was we will more have given more category of our Product growth, okay, as we divide it into a more finer product line. Okay. Yes, we'll give that number later, okay. Sounds good, Michael. And last one, about a year ago, you talked about getting into the medical end market. Any I mean, I know it's still probably very, very small as a percentage of revenue, but just trying to understand how fast your traction is in the medical end market. Yes. Okay. We have our product now And that's a well, we have several things that we have ultrasound and the ultrasounds, we do generate revenue. We see revenue now. The other one is X-ray machines, okay, X-ray and we put We have we're evaluating the first silicones and from our design side is florist, but we have some issue with the fab. And But that's a very minor issues, okay? I mean, we'll be able to solve that problem. And It is outstanding. Thank you for bringing it up this way. And So, the image is a lot more cleaner now and we could have delivered. And so, I think the customers are waiting and we're very excited. One other comment to add here is the Technology that we're referring to here is related to our high performance or precision analog. Data converters. Data converters, right. And this has been something that we've been working on for, I think, about 2.5 years, 3 years now. 2.5 years? 2.5 years. And I think what is really exciting is that this is an incredible opportunity and we're very close to being able to and declared that it's commercially viable in the market. So it's not just the medical, which is the first and market that we're going after with this technology, but the other opportunities this opens up for us. Yes, that's the same technology, similar technology that we'll be able to use in the telecommunications side. Sounds good. Congrats again on the stellar results. Our next question is from Kevin Gerrigan of Rosenblatt. Kevin, your line is now open. Hi, guys. Congrats on the quarter, and thanks for taking my question. Just a quick one for me. I was wondering if you could tell us what percentage of your business or percentage of backlog is based on 3 year newer products. I think last quarter, Bernie, you had said new products introduced in the last 3 years were about 37% of sales. So just kind of wondering if this was in the same range this quarter? Yes. The reason that we use that step on sort of a one time basis was to really give an order of magnitude to just how dynamic this new product introduction is as a component to our growth. So right now, obviously, in such a short one quarter term. It hasn't changed a whole lot up or down, but it's really not something that we want to be reporting on an ongoing basis. Yes. I think the last time we recorded is that 37%. Yes. I actually went back to look at it and was We actually cannibalize our self. And I think that's a better way to not get rather than other big guys eat And I think so we cannibalize quite a bit. And my figure is somewhere is 10% range, okay, all these are new product, we cannibalize it. And that's why the number is so high. But I would say that when there's cannibalization involved, you can bet that from market share gains against our peer companies that that's really the leverageable part of this story. Got it. That's helpful. Thanks, guys. Thank you. Our next question is from Quinn Bolton of Needham. Quinn, your line is now open. Just wanted to follow-up on Josh's question on gross margins. I know in the near term, better overhead absorption is driving the better margins. But If you guys have access to capacity and most of your competitors get constrained, I'm wondering, is there any room for you to get a little bit more to raise pricing in certain segments to take advantage of that capacity support or Will you just continue to kind of put your foot on the pedal and try to drive as much revenue through that additional capacity Or rather than trying to do it through pricing. Well, yes, MPS is still smaller, as the smallest in analog Semiconductive Business. And we okay, and at the same time, we want to have a and deliver a consistent result. And so now you see the margin even In this period, we don't fluctuate a lot in the because we don't we just pass on and pass on our calls to our customers. And We don't randomly just raise because we can now the shortage, we can gouging the price, okay? And that will affect the long term relationship with our customers. And so we just maintain that and maintain the margins, okay. I think the way this strategy fits everything fits for us. If there are any follow-up questions, please click the raise hand button. As there are no further questions, I would now like to turn the webinar back over to Bernie. I'd like to thank you all for joining us for this webinar and look forward to talking with you again during our Q3 webinar, which will likely be at the end of October. Thank you, and have a nice day. Have a nice day.