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BlackBerry Ltd
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Good morning, and welcome to the BlackBerry Fiscal Year 2019 Third Quarter Results Conference Call. My name is Matthew, and I'll be your conference moderator for today's call. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I'd now like to turn the presentation over to our host for today's call, Christopher Lee, Vice President of Finance. Please go ahead.
Thank you, Matthew. Welcome to the BlackBerry Fiscal Year 2019 Third Quarter Results Conference Call. With me on the call today are Executive Chairman and Chief Executive Officer, John Chen; and Chief Financial Officer and Chief Operating Officer, Steve Capelli. After I read our cautionary note regarding forward-looking statements, John will provide a business update, and Steve will then review the financial results. We will then open the call for a brief Q&A session. This call is available to the general public via call-in numbers and via webcast in the Investor Information section at blackberry.com. A replay will also be available on the blackberry.com website.Some of the statements we'll be making today constitute forward-looking statements and are made pursuant to the safe harbor provisions of applicable U.S. and Canadian securities laws. We'll indicate forward-looking statements by using words such as expect, will, should, model, intend, believe and similar expressions. Forward-looking statements are based on estimates and assumptions made by the company in light of its experience and its perception of historical trends, current conditions and expected future developments as well as other factors that the company believes are relevant. Many factors could cause the company's actual results or performance to differ materially from those expressed or implied by the forward-looking statements, including the risk factors that are discussed in the company's annual information form which is included in our annual report on Form 40-F and in our MD&A. You should not place undue reliance on the company's forward-looking statements. The company has no intention and undertakes no obligation to update or revise any forward-looking statements except as required by law. As is customary during the call, John and Steve will reference non-GAAP numbers in their summary of our quarterly and annual results. For a reconciliation between our GAAP and non-GAAP numbers, please see the earnings press release and supplement published earlier today. I will now turn the call over to John.
Thank you, Chris -- Christopher, sorry. Christopher. I didn't know your name Christopher. But anyway, thank you, Christopher. Good morning, everybody. As Chris stated, I will reference non-GAAP number in my summary for our quarterly results. BlackBerry had an exciting third fiscal quarter. First, we exceeded revenue, earnings per share and earnings and -- whatever, sorry, revenue and earnings per share expectation for the quarter. We delivered year-over-year double-digit percentage growth of total software and service revenue, earnings per share as well as free cash flow. We also entered into a definitive agreement to acquire Cylance, an artificial intelligence and cybersecurity leader. This acquisition will be a key investment to accelerate BlackBerry's future software and services growth. I will chat more about our acquisition and how it fits into BlackBerry's strategy later on the call. We continue to execute against our fiscal 2019 financial and operating plan. We delivered another good quarter of financial results. We are tracking to achieve the annual financial guidance we share at the beginning of the year. Let me provide some highlights for the third fiscal quarter. Total revenue came in at $228 million. Total software and services revenue was $219 million. This is a new record quarterly high. Total software and services billing grew year-over-year. Year-to-date fiscal 2019 total company software and services billing grew a double-digit percentage versus the comparable period last year.Gross margin came in at 76%. Operating income was $27 million, positive for the 11th consecutive quarters. Operating margin was 12%, an increase of 4 percentage points from last quarter. This, by the way, matches the highest operating margin reported by the company since fiscal 2012. EPS came in at $0.05. Total hand in cash and investments were $2.4 billion. Next, I will cover some of the significant highlights by business. First, I start with BlackBerry Technology Solutions, which includes embedded software and assets tracking. BTS revenue grew 23% year-over-year. Growth in BTS continue to be driven primarily by BlackBerry QNX, where software development license, services and royalty revenue have all grown double-digit percentage year-over-year. The increase in revenue has been broad based across various different application in both the automotive as well as the general embedded market. We continue to be chosen by customer from around the world, and a number of design wins in the quarter increased both sequentially as well as year-over-year. I will speak about our automotive business since I know you're -- a lot of you are mostly interested by our activities in that vertical. We had five infotainment design wins in the quarter, including a notable win with Aptiv in Asia Pacific. We also had 4 design wins in non-infotainment categories, like ADAS, instrument cluster and domain controllers. Two of those wins with our instrument cluster were with DENSO in North America and with Dalian Eastern Display in Asia Pacific. In addition, after the quarter ended, LeddarTech, a Canadian startup, chose QNX as the operating system for its auto and mobility LiDAR platform. LiDAR stands for light detection and ranging. LeddarTech is known for its production of solid-state LiDAR sensor and was recognized for its new innovation at last year's CES -- or CES this year, CES 2018. On BlackBerry Radar, our assets tracking business, we are making progress quarter-over-quarter. We added nine new customers, including, Bimbo Bakeries USA, Kreilkamp Trucking and [ Maxson ]. We also received repeat orders from six existing customers, including [indiscernible].A word on our licensing business. Our licensing business continues to perform well. We have a robust pipeline. We intend to close these licensing opportunity while building upon -- on our recurring revenue base of $40 million to $50 million per quarter. Next, I will discuss our enterprise software business. We achieved 7% sequential revenue growth this quarter. This represent our second consecutive quarter of sequential growth -- revenue growth after implementing ASC 606 in the first fiscal quarter of 2019, which moved more of our enterprise software and services revenue to a more ratable -- to a ratable model. In the quarter, the standout performers was our government business. Some of our notable wins included Defense Intelligence Agency; the Federal Emergency Management Agency, FEMA; the IRS, the Internal Revenue Services; the Transportation Security Administration, the TSA; the U.S. Air Force as well as U.S. Marine Corps. Our authority to operate has increased from six U.S. government agency last quarter to eight agency this quarter, including the U.S. Agency for International Development as well as the Department of Energy in the United States. Our BlackBerry FedRAMP cloud user base increased by 20% from last quarter to approximately 1.2 million users. Additionally, we saw increased demand for subscription to the UEM content suite from existing customer. The content suite provides customer with a highest level of security and includes secured document collaboration, which is BlackBerry Workspace and the digital rights management.Some brief comments on Sparks (sic) [ Spark ]. As you are aware, Spark is a platform we're developing to secure our communication and collaboration amount or smart endpoints. Spark brings together all our technology assets and capabilities on a single end-to-end platform. We believe there are many significant opportunities for Spark to address in the world where endpoints are hyper connected and as well as intelligent but also requiring absolute data privacy and security. So one such opportunity is the smart city and intelligent transportation systems. You see evidence of our vision and leadership with our recent announcement of a Security Credential Management System, symbol as SCMS, that will allow vehicle and infrastructure to exchange information in a trustworthy and private manner using our digital certificates technology. We believe BlackBerry can be at the foundation of smart city in the future autonomous vehicle world. Hence, necessary, too.Last month we announced entering into a definitive agreement to acquire Cylance. As I mentioned on our November call, the acquisition will provide BlackBerry with additional cybersecurity capabilities with state-of-the-art AI, artificial intelligence and as well as machine learning technology. These cybersecurity capabilities will fit nicely with everything we do, from today with UEM and QNX and to our future, which including the Spark. And is consistent with a long-term strategic strategy we share with you throughout the fiscal year.Our customers should be excited because our combination will bring complementary technology from cryptology to KNOX to AI and know-how that will allow BlackBerry to offer what we believe is the most secure end-to-end data and communication platform. We will go into more details on the technology as well as the use cases at our Analyst Day next April.Before I turn the call over to Steve, let me provide you with a quick update on the acquisition process. We have already received the HSR antitrust clearance. We actually received this early. Our joint voluntary notice has been filed with CFIUS. We anticipate receiving comments by the end of January 2019, and it should be closed shortly after. I will now turn the call over to Steve to provide some more details about our financial results and our quarterly performance.
Thank you, John. My comments on our financial performance for the fiscal quarter will be in non-GAAP terms unless specified otherwise. We delivered third quarter non-GAAP total company revenue of $228 million and GAAP total company revenue of $226 million. I will break down revenue shortly. Third quarter total company gross margin was 76%. Our non-GAAP gross margin include software deferred revenue acquired but not recognized of $2 million and excludes stock compensation expense of $1 million. Operating expenses of $146 million were down 3% sequentially as we continue to maintain financial discipline by optimizing our resources, becoming more efficient and improving our bottom line.Our non-GAAP operating expenses exclude $20 million in amortization of acquired intangibles, $14 million in stock comp expense, $1 million in restructuring charges and a benefit of $69 million related to the fair value adjustment on the debentures. Non-GAAP operating income was $27 million, and non-GAAP net income was $28 million. Non-GAAP EPS was $0.05 in the third quarter. Our adjusted EBITDA was $44 million this quarter, excluding the non-GAAP adjustments previously mentioned. This equates to an adjusted EBITDA margin of 19%.I will now provide a breakdown of our revenue in the quarter. Total software and services revenue was $219 million, representing 96% of total revenue and up from 85% compared to a year ago. Total SAF revenue was $9 million, and total handset device revenue was 0. SAF continues to wind down as expected. I will now provide a further breakdown of our software and services revenue in the quarter. Enterprise software accounted for 45%, BlackBerry Technology Solutions accounted for 24%, and licensing, IP and other accounted for 31%. Please refer to the supplemental table in the press release for the GAAP and non-GAAP details.I'm pleased to report we continue to make good progress since we implemented ASC 606 at the beginning of the fiscal year. You may recall that we reported an 18% year-over-year decline in enterprise software and services revenue in Q1. Since Q1, we have achieved sequential growth in enterprise software and services revenue so that the reported year-over-year decline has improved from 18% in Q1 to 10% in Q2 and 8% in Q3.We experienced the same progressive improvement if we were to account for the third quarter of last year under ASC 606 in the same way this fiscal year. On that basis, enterprise software and services revenue would have experienced approximately 6% growth year-over-year this quarter. Recurring software and servicing revenue was approximately 79% in the quarter, consistent with the definition we have used before implementing ASC 606, which was to exclude perpetual licenses from this calculation because they were recognized upfront.However, with the implementation of ASC 606 in the first quarter of fiscal 2019, any perpetual licenses we enter now are recognized ratably over four years. When including these perpetual licenses, recurring revenue would have been approximately 88% this quarter.Now moving on to our balance sheet and working capital performance. Total cash, cash equivalents and investments were $2.4 billion, which increased by $47 million from August 31, 2018. Our net cash position was $1.8 billion at the end of the quarter. Moving to the cash flow statement. Free cash flow, before considering the impact of restructuring and legal proceedings, was positive $39 million. Cash generated in operations were $62 million, and capital expenditures were $5 million.That concludes my comments. I'll now turn the call back to John to provide our financial outlook.
Thank you, Steve. We are reaffirming our fiscal year 2019 financial outlook, which are: total company software services billing growth to be double-digit; total software services revenue growth to be somewhere between 8% to 10%; non-GAAP EPS to be positive, and we will deliver a positive free cash flow for the year. With that, I would like to -- Matthew, I would like to open it for Q&A.
[Operator Instructions] Our first question today will be from Paul Steep with Scotia Capital Markets.
Steve or John, can you talk a little bit about IP and licensing business? John, you mentioned that the base was $40 million to $50 million but wondering did that step up in the quarter to a higher level? Or was there anything one-time or unusual that either moved forward from Q4 into the quarter? Or we had a new higher baseline?
I said $40 million to $45 million, you added $5 million to it. Our recurring quarterly IP is about $40 million to $45 million. It will creep up over time. Yes, they were a onetime in the quarter, but I'd like to talk about onetime because we -- as I said earlier, we have a pipeline of licensing deals, and we intend to close it. Timing of the close a lot of times are somewhat unpredictable. So we do have a good growth in Q3. No, it did not come in as an expense of Q4.
I just wanted to add to John's comment about the pipeline, which is, while we can't guarantee each and every quarter will be the same, we've been pretty consistent in bringing in revenue above that $40 million to $45 million number.
Okay. A quick follow-up. I guess, John, can you talk a little bit about the ramp-up in auto design wins? How we've seen that sort of layer on? In the last couple of quarters, you gave us a nice detail about new wins, but what I'm thinking back to is wins that you'd won over the last sort of 18 months, how those are starting to stack into the numbers in terms of non-IVI-type wins, where you're at in terms of shipping ADAS and non-IVI-type applications?
Okay. Gestation period of design wins are long in QNX. But once you get it, it's also a very long tail and quite stable on a quarterly basis. So what we really experiencing right now, the growth comes from probably something that we have won -- the design projects that we won about 3 years ago. And so -- they are shipping those design embedded into the auto, we're starting to see the royalty grow. So while we're winning like today, we will probably won't see it for 2, 3 years out. It will help create that base. But so as you can see, this is why it was so important to highlight the design wins so that you know that the pipelines are there, and the revenue will be coming on a lot of predictable way. So that's why we highlighted. And the non -- and you know that we have a big push on getting beyond IVI, the infotainment. And although IVI is -- caution everybody, is still a very, very good business. We have won some really big one in most recently. And all the cars now have IVI, it's kind of a standard now. So I wouldn't think IVI is that -- not as good as a piece of business.
Our next question comes from the line of Todd Coupland with CIBC.
One clarification, one question I'd like to -- so on IP licensing, there was some -- I might have missed this. So I apologize if I did. There was some discussion in the press that you had signed a licensing deal with Nokia. Was that contributing this quarter in the higher revenue?
Yes.
Okay. And is that finished now?
Finished? I'd say, Nokia are finished for the time being. Yes. I don't understand the word finish. We obviously...
So what I mean is, does it represent everything that you signed with Nokia up until now?
That's...
I don't want to go through the details in terms of the transaction itself, but I think in terms of future revenue, I would not see future revenue in the short-term from Nokia, correct.
Unless we have new licensing agreement. So Nokia and us could also work on new licensing. That's not precluded.
Just background for the question. I think there were some things written in the press where people were thinking it was sort of a plus $100 million opportunity, and there was a few things in the quarter that would have made up to $68 million. So that was the background for the question.
Yes. Don't believe what is written out there.
Yes. Second question. So I want to ask you about competition in device management. Is there any change in market share with what appears to have been a rise in Microsoft's position in some of the market research firms and magic quadrants that are out there in the past year? Just wondering how you're stacking up against that? We've had some investors ask this competitive question now with a little bit stronger push from Microsoft? Any color on that would be helpful.
Yes. So no doubt Microsoft is pushing very hard, and it affects every player in the market. To us, a little bit different because we're concentrated on regulated industry, and we're concentrated on federal and -- federal meaning government, I shouldn't say federal -- the governments around the world, 5G -- G7 and so forth. So we're concentrated on that, and we're concentrated on banking and finance where security is the number -- security and compliance are the #1 ingredient or #1 requirement. So we don't see as much of the lower end or the mid-range deal, yes, you could see why Microsoft very aggressive in that space. We still maintain our #2 position in market share according to IDC most recent publication. We don't expect to -- obviously, there are competition, but we expect to at least hold that position.
And longer term, if the acquisition of Cylance goes through, that may help us further our platform for UEM as well.
Our next question comes from the line of Gus Papageorgiou with Macquarie.
So what's happening -- Gus, what's happening with the auto market?
Well, since you're asking...
I was trying to ask you about that question.
I just wanted to maybe ask for a little more color on BTS. Some nice growth there, up 20% year-over-year. But I'm wondering if you can kind of segment kind of IEI (sic) [ IVI ] growth versus growth in the other software modules and maybe what we're seeing there and kind of as you're looking forward, should we kind of assume IVI is flat, and what kind of growth rate would you expect for the kind of other software modules in that line of business?
Well, when we talk about design wins, all these ADAS, clusters instrumentation, Hypervisors, all those wins are good wins. They are all design wins. So technically speaking, you're not really seeing the revenue in the numbers that we're reporting today but only to the exception of maybe some development feeds and some professional services. But those are not a high number. So the IVI, non-IVI growth is pretty split if you can see that we have nine design wins, five in infotainment, four in ADAS and cluster area. So we're making progress pretty much across the board.
So I mean, if I understand correctly then, is [ a very ] signature IVI is actually growing going pretty well and that we shouldn't assume that it's flat and so -- and I guess -- so consequently, it's because you're just -- you have the design wins and the seats, once these other programs going to volume, should we see a huge big ramp then? And what kind of timing can we expect?
Yes. The timing to be expect is usually two or three years [ all ] as you know the business quite well, and let me describe this, this way. Remember a couple of quarters ago, I said 3, 4 years ago, our platform is probably running about $20 million-or-so a quarter. Right now, we're running at close to $50 million a quarter. And so -- and that was a result of all the design wins 3, 4 years ago. When people keep asking me, when I told people that we have good design wins and they say, "Well, where's the beef," right? Where's the revenue? And now we're showing you the revenue of the design wins that we have in 2, 3, years out. So the next step up of that you should start seeing probably not immediately, about a year out maybe, you can start seeing the next plateau reach. So -- And that's how -- that's the nature of this particular business. The good thing, again, what I want to emphasize is, once you started to have revenue coming, if the flow is not only predictable and is ramping slightly over the life cycle, it's a long flow, it's a long tail.
Our next question comes from the line of Daniel Chan with TD Securities.
Just wondering if you had a chance to talk to some of your existing customers about Cylance? And if you could provide us with any early feedback you're getting from them?
Oh, yes. So first of all, we're really not supposed to talk about this before our Hart–Scott–Rodino was cleared, which is our antitrust. So we haven't really talked to a lot of customers in detail of how it's going to work, but we now could start doing that in some form now. But the early indication from the customers -- of very high interest. They all wanted to know how it gets to the mobility and how we could use the technology in the auto. We have good conversation, good discussion.
That's good to hear. I just want to switch gears to the enterprise software side. Steve, you talked about how you're making improvements there in the year -- that's showing up in your year-over-year. Just wondering if you guys can give us some indication of how your customers and your direct sales team moves back into the sale of more subscription licenses and perpetual? Is that where it needs to be now? Or is there still more work to be done?
Well, it's an ongoing process. The sales force is still adjusting to the subscription. But I wanted to tell everybody that we don't really have that big of sales force issue to deal with because our compensation plans for the salespeople add no difference whether it's subscription or -- because we comp people on billings. So there's no difference on how we take revenue. And so I wouldn't be concerned about that.
Yes. The major difference is, as you know, is a -- not just perpetual to subscription but just the fact that you can't change your quarter results in the final week of a quarter. So what you have to do is, the rhythm has to be week-to-week -- day-to-day, week-to-week as opposed to month-to-month. And so that's a change.
That's a change.
Right. That's a change, but...
That change is -- we're still working that.
Yes. It is, clearly.
Okay. But if you're compensating your team on billings, is it fair to say that they're more likely to get a larger or a good -- to chase a larger multiyear deal than a onetime perpetual license?
No. We still like a 2- or 3-year subscription deal. That's what we're asking every people to do.
And perpetual license would always be higher dollar value. So you know -- you know where I'm getting at, Dan?
Yes. No, I am. So my thinking is after the 2, 3 years are done from the subscription license, then they have an opportunity to renew that, that's better for the sales side of the long-term, isn't it?
Correct. And better for the company, which is why we chose that path.
Our next question comes from the line of Steven Fox with Cross Research.
Couple of questions on the relationship with Aptiv, which you highlighted with these five infotainment wins in Asia. My understanding as you've had a partnership on the autonomous driving side for better part of the year, but this is infotainment win. So I'm just curious if the two are going hand-in-hand? And then when you talk about winning business in Asia, with Aptiv, is that multiple OEMs, certain types of programs? Can you just sort of expand on that as well?
Yes. That particular one is -- they are using us as their platform. So it will eventually map into multiple customers. They obviously have customers in mind already, but they wouldn't -- so we do have a relationship with them on autonomous platform, but we also have a relationship with them, as you can see, on connected cars.
And the win in Asia was for a platform that's for a single OEM, or is it multiple OEMs?
In this particular instance, it's one single OEM.
Okay. Great. And then just broadly speaking, when you think about working with some of the Tier 1s, is there certain criteria you're looking at in terms of how it most benefits you guys? Or is there a number of Tier 1s that you can find attractive no matter what?
We like to work with every Tier 1, every Tier 1, every integrator. So I don't think we have a established profile of a Tier 1. Obviously, they need to have a good enough technology background and channel because we don't want them to misuse our technology. Sometimes some Tier 1 require our help to integrate the technology, and that's when our professional services work comes in.
Our next question comes from the line of Paul Treiber with RBC Capital Markets.
Could you clarify, on the billings growth, I think I heard earlier that it was double-digit year-to-date, but then it was just an increase year-over-year. Is that right? And then if so, what -- for this quarter, what led to the change?
To the change.
Yes. So the quarter -- as a total company, our billings growth was single digit. However, we still stay on track for double-digit for the year for the company. And we're really dealing with I think more or less the law of small numbers as opposed to anything significant in the market.
Okay. So it's just the quarterly ebbs and flows, and you didn't see any macro changes or anything in the quarter that would give you any reason to be concerned?
No. Not yet. No.
And then secondly, similar to the enterprise software business, a couple of months ago, you announced a partnership with Check Point. Can you provide an update there in terms of how that's rolling out? And then also can you explain how that partnership would also fit into like the BlackBerry post-Cylance?
Okay. That's a good question. The -- So we -- At that time, we have -- we announced actually three -- not at the same time but three MTD partner, the mobile threat detection partners, and Check Point is one of them. The other two are Lookout and Zimperium. From what I could check in the market, Lookout and Check Point's are quite active with us. And Lookout, we have won a number of deals, and Check Point, we have quite a bit of pipelines there. So things are looking good. But as to the after Cylance integrate, Cylance, of course, we going to port over the endpoint protection prediction technology. And hopefully that we could work with Lookout and Zimperium and Check Point on extending what they have to offer. So I think we could because it's a similar market but slightly different technology.
Okay. I see. Just lastly on ESS, enterprise software. How do we think about the seasonality of revenue going into Q4 in light of 606?
Well, Q4 was a -- was our biggest perpetual license quarter last year. So you have a little bit of a change there. And I would still expect a sequential -- I won't tell you whether it will be the same rate as we've done in Q2 to -- Q1 to 2 and 2 to 3, but I will still expect an uptick.
Yes. We'll see sequential growth in revenue from Q3. We also will see the 606 damping effect also goes down as we continue to make progress. Like Steve has mentioned earlier, we went from minus 18% year-over-year to minus 10% to minus 8%. It should be better than that.
And just so I fully understand, even with 606, there's still some license revenue that you would take on upfront basis?
Yes. So how it works is as follows. As long as we have delivered all of the services, at the time, we can take the revenue. Let me give you an example. So you could have a situation where a singular product is being sold as opposed to the suite. And obviously, in that space, we have a product, Secusmart, which is a different functionality than our normal UEM. So we do have some components that will have the mediacy of revenue.
But then that's not high.
And you can tell it's not high because when we factor in the recurring revenue at the high-80 rate, it's small numbers.
Yes, those are small number. I mean, it is true, like Steve said, that those condition does exist, but it's not a high[Audio Gap]not high number as well.
Our next question comes from line of Trip Chowdhry with Global Equity Research.
Again, very exciting numbers here. Two questions on Cylance. We were at Amazon AWS conference. I can tell you, the acquisition you have made is fundamentally a game-changer for the whole industry. I was wondering, currently based on your comments, you seem to be focused on making sure Cylance integrates and works well with your existing products. The impression I got from talking to various people at the AWS conference was, Cylance might itself has a multibillion-dollar opportunity in competitive replacements of old generation security products in the industry because this -- the company you acquired literally is a game-changer because the machine learning algorithm's precision is above 80%, probably the highest in the industry. I was wondering, do you think it will make sense to just keep Cylance segmental revenues separate so that we can monitor the impact Cylance is having on the BlackBerry?
Very good -- great question. First of all, I think you know me for a very long time. I'm trying to be a little bit more conservative without having seen an entire integration plan. No doubt Cylance is itself is a high-growth entity in their own business, and no doubt that they are the standout on the EPP protection using AI technology, and they are highly competitive against replacing the old signature-based technology, which are Symantec and McAfee. And so those are very exciting opportunity. I'm not -- I'm still pursuing those opportunity, obviously. What I wanted to explain to the shareholder is not something that we added to a number of things we're already doing, it's complementary to what we're doing. And in addition to the opportunity, they could explore in the whole cybersecurity world, which is, obviously, multibillion-dollars' business marketplace. So we have not -- I have not decided on the organization going forward. We will keep them as a separate business unit, for sure. That has been decided. And so once we decided what the organization going forward, we will then adjust the reporting of that. And I can hear your point, and we'll most likely -- can guarantee you, most likely, we'll keep Cylance reporting as a separate line.
[ No further questions, I'll now pass it to John ].
All right. Thank you, Matthew. Okay. Thank you very much for everybody's time today. Like to wish you all a very happy season -- a happy holiday season. And we look forward to seeing you in Vegas -- Las Vegas for the CES in January -- early January. And I also want to remind everybody, don't forget to put on your calendar to come talk to us on our Analyst Day in April at San Ramon, California, where the weather is a lot better than Toronto. Thank you all very much, and have a great holiday. Bye.
Thank you.
This concludes today's call. Thank you for your participation, and you may now disconnect.