Cirrus Logic, Inc. (NASDAQ:CRUS) Q3 2025 Earnings Call Transcript

Cirrus Logic, Inc. (NASDAQ:CRUS) Q3 2025 Earnings Call Transcript February 4, 2025

Cirrus Logic, Inc. beats earnings expectations. Reported EPS is $2.51, expectations were $2.36.

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic Third Quarter Fiscal Year 2025 Financial Results Q&A Session. At this time, all participants are in a listen-only mode. After a brief statement, we will open up a call for questions from analysts. Instructions for queuing up will be provided at that time. As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the conference call over to Ms. Chelsea Heffernan, Vice President of Investor Relations. Ms. Heffernan, you may begin.

Chelsea Heffernan: Thank you, and good afternoon. Joining me on today’s call is John Forsyth, Cirrus Logic’s Chief Executive Officer, and Ulf Habermann, our Interim Chief Financial Officer. Today, at approximately 4 p.m. Eastern Time, we announced our financial results for the third quarter, fiscal year 2025. The shareholder letter discussing our financial results, the earnings press release, and the webcast of this Q&A session are all available at the company’s Investor Relations website. This call will feature questions from the analysts covering our company. Additionally, the results and guidance we will discuss on this call will include non-GAAP financial measures that exclude certain items. Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in our earnings release and are all available on the company’s Investor Relations website.

Please note that during this session, we may make projections and other forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially from projections. By providing this information, the company expressly disclaims any obligation to update or revise any projections or forward-looking statements, whether as a result of new developments or otherwise. Please refer to the press release and the shareholder letter issued today, which are available on the Cirrus Logic’s website, and the latest Form 10-K, as well as other corporate filings registered with the Securities and Exchange Commission, for additional discussion of risk factors that could cause actual results to differ materially from current expectations.

Now I’d like to turn the call over to John.

John Forsyth: Thank you, Chelsea, and welcome to everyone joining today’s call. As you’ve seen in the press release, in the December quarter, Cirrus Logic delivered revenue of $555.7 million, above the top end of our guidance range. In a moment, I’m going to hand the call over to Ulf to discuss the financial results for the quarter in detail, as well as our outlook for the March quarter. But before we move on to that, I’d like to make a few comments about the recent progress we’ve made on our company strategy. As many of you are aware, our long-term strategy for growth at Cirrus is based around three principles. First, maintaining leadership in our core flagship smartphone audio business. Second, expanding the value and range of high-performance mixed-signal functionality in which we serve our customers in smartphones and similar products.

And third, leveraging that world-class expertise and IP in both audio and high-performance mixed-signal areas to grow and broaden our business in new markets. I want to now speak to our recent progress in each of those areas. In our flagship smartphone audio business, during the quarter, we were delighted with the success of our latest generation custom-boosted amplifier and our first 22-nanometer smart codec, both of which began shipping in recent smartphones. These products represent years of engineering effort and a deep and collaborative relationship with our customer. We’re proud of the crucial role they play in enhancing the power efficiency and exceptional audio quality of our customers’ latest products. We also anticipate that these components will be used in multiple generations of smartphones over a number of years, giving us excellent longer-term visibility and an opportunity for sustained revenue contribution.

Outside of our custom audio solutions, we also continue to engage with customers with our general market products on next-generation flagship smartphones. And during the December quarter, a leading Android OEM introduced their latest flagship smartphone featuring three Cirrus Logic components, including two boosted amplifiers and a haptic driver. Beyond audio, our goal is to continue to broaden our high-performance mixed-signal content in smartphones, where we see a meaningful opportunity to not only expand our addressable market but also to grow and diversify our revenue. Our progress in this area has been demonstrated through the continued success of our camera controller product line, as the total value of our camera content has increased over the last few years.

With the latest generation of devices, we are benefiting from a more favorable overall mix of smartphones on the market that include these camera controllers. And this more favorable mix contributed to today’s robust results. We also believe there is significant potential to continue to grow value in this area in the future, and we are today investing in a roadmap of further products and features in pursuit of that goal. Beyond camera controllers, we have also seen strong interest in our capabilities around battery and power. Currently, we have a number of R&D programs underway related to these areas, and we continue to be excited about the long-term opportunity these areas represent for further growth and diversification of our revenue. The third principle of our strategic plan is to leverage our audio and high-performance mixed signal expertise into new applications and markets outside of smartphones, such as laptops.

Although we are still in the early stages of revenue contribution from our components, we were pleased with the milestones we achieved during the past few months. First, our audio solutions were featured as part of the Intel Arrow Lake reference design. Second, amid a significant number of laptop announcements at CES 2025, a leading laptop OEM introduced a high-volume commercial mainstream laptop that utilizes the Soundwire interface and features our latest PC codec and power conversion IC. Lastly, we’re excited to have started sampling our next-generation PC amplifier and codec, which we anticipate will broaden our portfolio further and address a wider range of the laptop market as customers seek to deliver improved performance across tiers and retail price points.

While we are very excited about our potential for growth in the PC market, we also see opportunities to expand our business in other new markets. As part of this effort, during the quarter, we began sampling a series of timing products designed to enable superior audio experiences in automotive and professional audio applications. We’re encouraged by the early customer interest and the strategic opportunities ahead of us in these markets. Finally, before we get into the deep dive on our results, I’d like to take a moment to highlight the leadership announcement we made earlier today. We’re delighted that Jeff Woolard will be joining Cirrus Logic as Chief Financial Officer later this month. Jeff brings considerable experience in the semiconductor industry, as well as a proven track record in finance, strategy, and M&A.

I believe his deep industry knowledge and financial expertise will be a considerable asset as we continue to execute on our strategy to drive growth in our existing business while expanding into new markets. All of us at Cirrus are excited to have Jeff join the team. I’d also like to take this opportunity to thank Ulf Habermann for his leadership as Interim Chief Financial Officer while we conducted this search. Ulf is an outstanding member of the Cirrus Logic organization, and I look forward to continuing to work with him in his role as Principal Accounting Officer, Treasurer, and Senior Vice President of Finance. And with that, let me now turn the call over to Ulf to provide an overview of our financial results, as well as the outlook.

Ulf Habermann: Thank you, John, and good afternoon, everyone. I will start with a summary of our financial results for third quarter fiscal 2025, and then provide guidance for Q4 FY’25. In Q3 FY’25, we delivered revenue of $555.7 million significantly above the top end of our guidance range due to stronger than expected demand for products shipping into smartphones. On a sequential basis, revenue was up 3%, primarily due to higher smartphone unit volumes. On a year-over-year basis, sales were down 10%, primarily driven by lower smartphone unit volumes, in part due to the timing of our fiscal quarters. This was partially offset by increased revenue associated with our latest generation product. Also, as we indicated in our Q2 FY’25 shareholder letter, when comparing our December quarter to the equivalent quarter last year, we would note that in FY’25, our December quarter began one week later.

Thus, it encompassed one week less of the higher volume production associated with typical seasonal product rents. Additionally, in FY’25, our December quarter included one less week of revenue when compared to the equivalent quarter the prior year, as FY’24 was a 53-week fiscal year. Turning to gross profit and gross margin, non-GAAP gross profit in the quarter was $298.1 million, and non-GAAP gross margin was 53.6%. On a sequential basis, the gross margin increase of 140 basis points was mostly driven by a shift and mix towards higher margin products, and to a lesser extent, lower supply chain costs. The 230 basis point increase year-over-year was due to a shift and mix towards higher margin products. This was partially offset by higher inventory reserves and supply chain costs.

Now I’ll turn to operating expenses. Non-GAAP operating expense for the third quarter was $129.2 million. On a sequential basis, OpEx was up $2.5 million, primarily due to higher employee-related expenses. This was offset by a reduction in product development costs. On a year-over-year basis, operating expense was up $3.6 million, largely due to higher employee-related expenses. This was partially offset by an increase in R&D incentives. Non-GAAP operating income for the quarter was $168.9 million, for 30.4% of revenue. Turning now to taxes. For the December quarter, our non-GAAP tax rate was 21.8%, in line with our previous guidance. And lastly on the P&L, non-GAAP net income was $138.3 million, resulting in earnings per share for the December quarter of $2.51.

Let me now turn to the balance sheet. Our balance sheet continues to be strong, and we ended the December quarter with $816.6 million in cash and investments. Our ending cash and investments balance was up $110 million from the prior quarter, as cash generated from operations was partially offset by share repurchases. We continue to have no debt outstanding, and have $300 million undrawn on our revolver. Inventory at the end of the third quarter was $275.6 million, up from $271.8 million in Q2 FY ’25. Days of inventory were up slightly sequentially, and we ended the quarter with approximately 98 days of inventory. Looking ahead, in Q4 FY ’25, we expect an increase in inventory dollars from the prior quarter. We anticipate inventory will continue to increase and peak in the first half of FY ’26 as we continue to fulfill demand and manage our wafer purchase commitments for our long-term capacity agreement with GlobalFoundries.

Turning to cash flow. Cash flow from operations was $218.6 million in the December quarter, and CapEx was roughly $6.7 million, resulting in non-GAAP free cash flow margin of roughly 38%. And for the trailing 12-month period, cash flow from operations was $484.5 million and CapEx was roughly $27.3 million. This resulted in non-GAAP free cash flow margin of roughly 25%. On the share buyback front, in Q3, we utilized $70 million to repurchase approximately 679,000 shares of our common stock at an average price of approximately $103. At the end of Q3 FY ’25, the company had $154.1 million remaining in its share repurchase authorization. We expect to continue to return capital in the form of stock repurchases, which we believe will provide a long-term benefit to shareholders going forward.

Now on to the guidance. For Q4 of FY ’25 we expect revenue in the range of $350 million to $410 million. GAAP gross margin is expected to range from 51% to 53% and non-GAAP operating expense is expected to range from $119 million to $125 million. We expect our FY ’25 non-GAAP tax rate to be approximately 22% to 24%, unchanged from our previous guidance. This range is slightly higher than our FY ’24 tax rate, which was impacted by a favorable catch-up benefit related to updated IRS guidance on the R&D capitalization rules. In closing, we delivered strong results for the December quarter as we continue to execute on our strategy to grow our business and drive long-term shareholder value. Before we get into Q&A, I would like to note that while we understand there is intense interest related to our largest customer, in accordance with Cirrus Logic company policy, we will not discuss specifics about our business relationship.

With that, let me now turn the call to Chelsea to start the Q&A session.

Chelsea Heffernan: Thanks, Ulf. We will now start the Q&A portion of the earnings call. Please limit yourself to a single question and 1 follow-up. Operator, we are now ready to take questions.

Q&A Session

Operator: [Operator Instructions] We’ll take our first question from the line of Tore Svanberg with Stifel. Please go ahead.

Tore Svanberg : Yeah, thank you. And congratulations on the results, especially the cash flows. I had a question on your timing business, John. This is obviously new. And I was just wondering — are you leveraging sort of the old MEMS IP you have here? Or should I think about the technology here as being something that you have more recently developed?

John Forsyth : Thank you, Tore. Yes, this is not leveraging MEMS IP. When we got out of MEMS, we really did get out of MEMS. This is a new IP we’ve developed with a few opportunities in mind that we see for this technology. One of those we mentioned in the series of announcements last year around the Pro audio market. And then one of the other key target markets for that is the automotive market. So that’s very much a long-term project for us, just given the lead time and the lag in the auto industry. So we don’t expect anything material around that for several years. But we have, over the past year, seen really great interest from customers in audio parts for automotive, haptic parts for automotive and timing products for automotive.

And as in-car networks become more prevalent and there are more audio zones and more speakers and more children and so on, the need for low-jitter clocks, and great timing products increases, and that’s what we’re serving there. So as I say, it’s very much a long-term project, although that particular product or some of those products have been already specified as part of a future platform by at least one Tier 1 OEM. So we’re very optimistic about it long term, but it will be some time before it moves the needle.

Tore Svanberg : Very good. And as my follow-up, so I do know you’re in a fiscal year, but this is the beginning of a new calendar year. Obviously, you have content growth sort of happening pretty consistent every year because of the cascading effects and so on and so forth. But as we think specifically about calendar ‘26, is this going to be more sort of a unit growth year? Or is there some more material content growth that you could potentially speak to?

John Forsyth : Yeah. I think we always stop shy of talking about unannounced customer products, obviously, but I have previously said this isn’t a major content year for us on the smartphone side. That said, we always aim to be in a position to grow in a flat unit environment. We don’t want to be depending on unit tailwinds. We can do better than that. So we do still see some favorable tailwinds over the next year. One of those in the smartphone space, of course, is that cascading effect, in particular, we see that kind of continued year-on-year accretion of the value of our camera content. That gives us a favorable tailwind as we go into the next cycle. And then, of course, we’re anticipating growing momentum in the laptop space this year as well.

Operator: Our next question comes from the line of Thomas O’Malley with Barclays. Please go ahead.

Thomas O’Malley : Hey, John. Thanks for taking the question. Appreciate it. My question was about the linearity of the quarter. So you guys did a really good job last time around kind of talking about the differences between this December — in December of 2023. And if I look at the difference between what would have been another week in sales, it looks like you guys actually did even a bit better than that in terms of where you had originally set up guidance. So can you talk about what happened? You called out units specifically in the shareholder letter. Was that something that you saw kind of consistently in the quarter went along? Or did something change at some point in the quarter that got you to the better results here from a unit perspective?

John Forsyth : Yeah, Tom, thank you. That’s a great question. Actually, one of the things that we saw during the December quarter was more sustained demand than would be typical for a December quarter pattern. So I’ve said elsewhere that it’s not unusual, in fact, in the majority of years, we’d see some kind of demand modulation during the December quarter just as the channel gets stopped and there’s a read on the demand at the end user level for the devices. Actually, what we saw in this quarter was really the demand that we saw from our customer was very steady and in fact, increased slightly relative to when we guided. And then, of course, that was one of the factors along with new content from us there that drove the strong results.

Thomas O’Malley : And then if I look at your June quarter as well as in the March quarter, I know that you guys can’t tell what devices you’re being shipped into, but you can see mix particularly given that you’ve updated the codec in this last generation. So has there been any mix shift to any more of the legacy product that you’re shipping at the end of the December quarter or into the March quarter to this point? I just want to understand if there’s any mix dynamic that’s changing here into the March quarter at all. Thank you.

John Forsyth : I don’t think we’ve seen anything pronounced from a mix ship perspective. Obviously, we can quite clearly identify what shipping into new devices. But when it comes to older generation devices or any products which are using devices that we’re shipping that have been in the market for some time. We have a relatively low resolution view of that. We don’t know exactly what the — how that breaks down. But I think if you look — so far as I’m aware, if you look from the December quarter through to now, we didn’t see anything significant change from a mix shift perspective.

Operator: Our next question comes from the line of David Williams of The Benchmark Company.

David Williams : Hey. Thanks for taking my questions. Congrats on a really solid quarter. I guess maybe my first question is just on the gross margin side. Clearly, a few different drivers there, and you pointed to some of those in the script. But if I’m not mistaken, like a record high, at least as hard my model goes back. So just kind of curious what the drivers are there and how much of that is really driven by the new products, maybe into your largest customer versus some of the products that are going into some of the other markets that you’ve had success in or with?

John Forsyth : Yeah, of course. So we don’t break out in detail all the moving pieces associated with gross margin — it’s obviously though a function in large part of our supply chain costs and overall product mix. And it can move around a lot in particular, in periods of introduction of new products. If you look back over the whole fiscal year or over the past few quarters, in fact, in a relatively short span of time, we’ve gone from guiding gross margin below our long-run average to, in this case, reporting gross margin above our long run average. And when we were guiding below our long-run average that was at the beginning of the ramp of new products. And you typically do see headwinds on supply chain costs at that time.

And there’s a huge amount of work to kind of get that yield curve progress along the yield curve, improved test times and so on. And that’s a big part of what the team has focused on over the past few months since we started ramping these products to do the best job we can on efficiency and driving down supply chain costs. So that obviously plays a big part along with overall product mix and driving the results that we reported.

David Williams : Thanks. And I appreciate the color there. And as a follow-up, just kind of curious if you could size the market for the laptop side. It sounds like you’ve got some new products that are kind of moving down the tiers. More maybe for the broader market. Can you talk maybe about that — your expectations there? And maybe what the laptop market could potentially be if we look out a couple of years in terms of revenue? Thank you.

John Forsyth : Yeah, absolutely. So from a units perspective, if you take the overall laptop market and say, call it between 200 million and 220 million units, depending on your research source. We think we should be able to address somewhere approaching half of that. And the products — the new products that we referenced in the shareholder letter are an important part of that strategy in supporting a wider range of price years and a wide range of configurations of content, different audio architectures and so on. So we think — the way we categorize the tiers is that in really anything above the kind of $800 price point is highly relevant to us. And of course, there’ll be cases where we’re aiming at products below that. But that really does put you firmly in the kind of mainstream bracket.

And gives you roughly half the market to shoot for. Within that range of units, there’ll be a fairly broad spectrum of different content configurations. It could be anything from a single piece of content, maybe rounding to one up to high single digits, where we have a mixture of amplifiers, haptics, power converters and codec. So when we think further out about the size of the market. I’m not going to put a revenue number a couple of years out, but we do see a kind of continued solid growth opportunity for us here. I said the previous color I’ve given on our kind of revenue ramp in the PC space has been that it was kind of de minimis in fiscal ’24, and then we were targeting low tens of millions in fiscal ’25. So as I mentioned in the letter, we’re tracking in line to that as we approach the kind of home straight of fiscal ’25.

And then we expect that to — depending on the overall demand picture, based on the designs that we have secured to date, we would expect that to roughly double during fiscal ’26. And then beyond that, we see a good opportunity for a meaningful step-up in revenue from there in subsequent years.

Operator: Our next question comes from the line of Christopher Rolland with Susquehanna. Please go ahead. Christopher, your line might be on mute.

Christopher Rolland : Thank you. Thank you, operator. So you guys used to talk about HPMS being potentially at parity with audio as a percentage of revenue at some point in the future? And then obviously, this is a strong cycle for audio for you guys. I think audio was 62% of total. So I guess my question is, do you still expect HPMS to match audio at some point in the future? And what might be a rough time frame for this? Is it a year or two years or much more than that? And what has to happen for parity there between those segments? Thanks.

John Forsyth : Yeah. Thanks, Chris. I do think so. Yeah, it’s not in a year, I don’t think. But as we look a bit further out within our planning horizon, it is certainly something that we think is a very real opportunity. So yeah, we are in a period where actually our audio content accelerated a bit in this fiscal year. We’re obviously very happy about that. So the kind of parity point was really to convey how large of an opportunity we see with HPMS. It’s not that we don’t want to grow audio as well, obviously. But when we look further out, really, HPMS actually represents the larger part of the SAM that we see ahead of us. So in our investor presentation, you’ll see we talk about a roughly $9 billion SAM in 2028 that we think is in front of us.

And audio comes in at just a little over third of that. So we see significant opportunity to expand in HPMS and that is kind of disproportionately large relative to audio. And as I’ve said previously, that will be a mixture of components, whether that’s a camera or haptics or power related. We have a number of irons in the fire on the HPMS front and believe that they all represent a good opportunity to drive growth.

Christopher Rolland : Thank you, John. And also in the letter, it’s a good segue into power. So you spoke about a number of R&D programs for battery and power management. I guess, first of all, I was wondering if you could talk about the investment when you think that investment in R&D might peak. And then are these products ready for revenue today? Or when might we see these products ramping for revenue?

John Forsyth : Thank you, Chris. We are shipping a range of power-related products for revenue today, both in our custom silicon business and in the general market. So power is something that we ship into both Android devices and laptops, for example. But when we talk about the investments that we’re making kind of below the waterline that you’re not — that are invisible to outside as yet. We do think there are a number of other power areas where there is opportunity to grow. And typically, I’ll call this out since you mentioned power management. Typically, we think less of conventional power management and more around power control, conversion and sensing with particular focus on stuff around the battery. So either side of the battery but really leveraging our extremely high-precision sensing capability and our ability to kind of package that with a lot of digital enabling fine grain control and signal processing alongside the analog.

So where we’re at today in relation to those is we have some great IP in silicon. Some of that has been shown to customers. Some of it will be shown to customers before too long. And we’re kind of working the playbook, which is very familiar to us to take those innovations forward to socket. So we’re still we’re still some way off that, and we’ll obviously kind of give more color as things progress. But we’re very familiar with the process around securing high-value sockets in the HPMS domain. You’re not going to win one without showing very, very innovative IP in silicon. And so at this point, we’re — we feel in a good spot with IP that we’ve got in test silicon, and we’re looking forward to taking it forward from here.

Operator: Our next question comes from the line of Gary Mobley with Loop Capital. Please go ahead.

Gary Mobley : Hi, everybody. Thanks for taking my question. I know you’re not going to give too many details or any with respect to your largest customer. But clearly, there’s a lot of early speculation that maybe that largest customer might move to a multi-lens horizontal configuration for camera, especially at the premium tier, maybe some thinner designs in the lower tier and maybe even some foldable designs and without maybe talking about your customers specifically there, maybe if you can just talk in general about how those types of configurations and designs might affect your content in camera haptics, power-related content and what not?

John Forsyth : Well, we’re certainly very proud of what we’ve done over the past few years in helping to enable innovation in cameras. We’re the launch last fall was our fifth successive generation of camera controller — customer products shipping with our camera controllers in there, and there have been some really, really meaningful innovations in that time. I would say that’s one of the areas when I look across all our engineering — that’s one of the areas where we work most tightly with our customer teams on future road map technologies. So you can be sure that we have a substantial amount of investment going into enabling more features and more functionality for the future, but it’s clearly something that would be extremely discrete about what’s involved in that.

When we think about different form factors, form factor devices, devices with hinges and so on because we’ve been shipping in folding devices for several years now, for example. And what we see is that represents great opportunities for us in — certainly in audio and potentially a haptic space, because typically, well, for a variety of reasons, one would be that you don’t necessarily want too much stuff going across the hinge, if you can avoid it. At another reason why it creates opportunity is that often the devices have multiple modes of use when they’re folded and when they’re unfolded, that leads to quite often in the case of audio functionality that leads to more microphones, different configurations of microphones and requirements for processing in different device orientations and so on.

And all of that kind of drives new features and new requirements for us. That’s what we’ve seen in kind of novel form factor devices that we’ve been shipping in for a few years.

Gary Mobley : Okay. Appreciate that. As my follow-up, I wanted to ask about the Android win that you highlighted in your prepared remarks. I think you mentioned 3 audio products in use there. And I presume this is for some of your general purpose products. I don’t think you really go into the Android market with application-specific products or custom products. So my question is, with this general purpose approach into the Android market, are there ample opportunities? And could it ever be a sizable portion of revenue for you?

John Forsyth : When we think about Android, I’ve been pretty clear over the past couple of years that we treat that largely on an opportunistic basis. And the reason for that is that we anticipated headwinds in China, largely due to geopolitical reasons and because we feel there are larger opportunities for us elsewhere. So for example, in the laptop space. So as of right now, we don’t make a lot of R&D investment in the Android space, but we continue to win flagship sockets in both audio and haptic with multiple Android OEMs based on products that we have today. And those are leveraging IP that we’ve developed over the years. And have shipped into many, many Android phones. So we continue to serve our customers there and grow revenue where we can and win sockets where we can and where that’s kind of economically attractive to us. But the focus for our R&D investment is on growing in other markets.

Chelsea Heffernan: And we have time for one more question.

Operator: Our final question comes from the line of Tore Svanberg with Stifel. Please go ahead.

Tore Svanberg : Yeah, thanks. Just one follow-up. Your SG&A has been consistent around revenue — 6% of revenue here for many, many years. I’m just wondering as you continue to venture into new markets, do you have to invest in sort of a new sales organization or should we think of your entrance into the automotive market, for instance, kind of more similar to laptop where it’s more based on a reference design, where you don’t need that big of the sales force?

John Forsyth : I would say, Tore, if you think about it, the SG&A level that we’re at, we’re pretty comfortable with. I don’t see that significantly changing into the future even if we tackle new markets. We do have opportunities to also look at where our existing investments are. We allocate that a bit. And I don’t see us growing that to support those markets.

Tore Svanberg : Thank you, John.

Chelsea Heffernan: And with that, we will end the Q&A session, and I will now turn the call back over to John.

John Forsyth: Thank you, Chelsea. In summary, in Q3 fiscal year ’25, Cirrus Logic delivered outstanding results for the December quarter as we experienced strong demand for components shipping into smartphones — we continue to make solid progress in each of the three key areas of our long-term strategy and remain very excited about the opportunities in front of us. I’d like to thank you for your continued interest in our progress and to thank our employees for their incredible dedication and commitment. Thank you for participating today. Goodbye.

Operator: That will conclude today’s call. Thank you all for joining. You may now disconnect.