Pixelworks Inc (PXLW) 2018 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Pixelworks, Inc. Fourth Quarter 2018 Earnings Conference Call. I will be your operator for today's call. (Operator Instructions) This conference call is being recorded for replay purposes.

I would now like to turn the call over to Pixelworks Vice President and CFO, Mr. Steve Moore.

Good afternoon, and thank you for joining us today. With me today is Todd DeBonis, Pixelworks' President and CEO. The purpose of today's conference call is to supplement the information provided in our press release issued earlier today announcing the company's financial results for the fourth quarter and fiscal year 2018.

Before we begin, I'd like to remind you that various remarks that we make on this call including those about our projected future financial results, economic and market trends and our competitive position constitute forward-looking statements. These forward-looking statements and all other statements made on this call that are not historical facts are subject to a number of risks and uncertainties that may cause actual results to differ materially.

All forward-looking statements are based on the company's beliefs as of today, Thursday, February 7, 2019, and we undertake no obligation to update any such statements to reflect events or circumstances occurring after today.

Please refer to today's press release, our annual report on Form 10-K for the year ended December 31, 2017, and subsequent SEC filings for a description of factors that could cause forward-looking statements to differ materially from actual results.

Additionally, the company's press release and management statements during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms including gross margin, operating expenses, net income loss and net income loss per share. These non-GAAP measures exclude deferred revenue fair value adjustment, inventory step-up and backlog amortization, amortization of acquired intangible assets, stock-based compensation expense, restructuring expenses, acquisition and integration expenses, discount accretion on convertible debt fair value, gain on extinguishment of convertible debt, fair value adjustment on convertible debt conversion option and benefits related to tax reform. With the exception of stock-based compensation and benefit related to tax reform, all of these adjusting items are related to the acquisition and integration of ViXS Systems. We use these non-GAAP measures internally to assess our operating performance. The company believes that these non-GAAP measures provide a meaningful perspective on our core operating results and underlying cash flow dynamics, but we caution investors to consider these measures in addition to, not as a substitute for, nor superior to, the company's consolidated financial results as presented in accordance with GAAP.

Included in the company's press release are definitions and reconciliations of GAAP to non-GAAP net income/loss and GAAP net income/loss to adjusted EBITDA, which provide additional details.

With that said, I will now turn the call over to Todd for his opening remarks.

Thank you, Steve, and good afternoon, and welcome to everyone joining us on today's call.

Beginning with a quick overview of our results for the quarter, consolidated revenue in the fourth quarter increased more than 11% year-over-year to $20.5 million, driven by annual growth across all 3 of our target end markets. Gross margin remained solid and came in slightly better than expected for the quarter at just over 55%. As anticipated, we were profitable on a non-GAAP basis with EPS in the high end of our guidance range.

For the full year 2018, revenue grew 14% after adjusting for the contribution from EOL products. Gross margin remained favorable within the mid-50% range for the full year.

In terms of operating expenses, it's worth highlighting that OpEx for the year was only up 5%, which highlights our financial discipline in reducing the incremental operating expenses associated with acquiring ViXS in late 2017. We also maintained robust R&D efforts throughout the year while benefiting from approximately $4 million of R&D offsets associated with the co-development for our large projector customer.

As a result, we achieved breakeven or better bottom line results on a non-GAAP basis in each quarter of 2018 and generated positive cash from operations for the year. Also notable for the year, the business we previously acquired from ViXS, which we now refer to as Video Delivery, became accretive in the third quarter and is now meaningfully contributing to quarterly EPS.

Finally, in December, we entered into an agreement to monetize a group of nonstrategic patents acquired as part of ViXS. And no revenue was being generated from the associated IP. The sale of these patents will result in Pixelworks realizing a net gain of $3.9 million in the first quarter of 2019. In addition to adding non-dilutive cash to the balance sheet, this transaction effectively reduces the original purchase price paid for ViXS, further underscoring the realized value of this acquisition for Pixelworks.

Now turning to an update on each of our end markets. Our digital projector business performed as expected during the fourth quarter with revenue declining sequentially from a seasonally strong third quarter and up more than 8% over the year ago quarter. As we indicated as part of our previously provided quarterly guidance, the fourth quarter included approximately $1.5 million of projector-related EOL product revenue.

Unrelated to the EOL, but also as expected, we successfully completed our multi-year co-development of an advanced next-generation SoC for our large projector customer during the fourth quarter. As a result of fulfilling the last milestone associated with this development project and releasing the new chip for production, we recognized a small remaining offset to R&D expenses in the quarter. As a reminder, this new SoC for projector was developed as a next-generation replacement for an existing Pixelworks SoC that we currently sell exclusively to this large customer. We anticipate this customer to begin transitioning its product portfolio to the new SoC late in the second half of 2019. While this transition will ultimately be a multistage process that stretches well into 2020, we expect it to dampen the effect of our typical seasonality in the back half of 2019.

In addition to underpinning our long-term success with this large projector customer, we are leveraging a significant amount of this completed development work and technology in our next-generation products for other digital projector customers.

In terms of the broader projector market, it is important to recognize that a large portion of the total unit volume and end market demand for digital projectors is driven by either the education applications in emerging markets or enterprise applications in developed markets. Therefore, the current macroeconomic backdrop in China and the ongoing trade tensions are relevant and will ultimately have an impact on the overall health of the projector market.

Although we observed no direct impact to our results in the fourth quarter, we did see demand for the first half of 2019 begin to deteriorate late during the quarter. Although near-term bookings have firmed up somewhat since the beginning of the year, we believe the macro environment, particularly in China, is likely serving as a drag on both end demand and customer order patterns.

Shifting to video delivery. As anticipated, we had another strong quarter with Q4 representing the second consecutive quarter of greater than 30% year-over-year revenue growth, the primary driver of the continuation in the ramp of our XCode family of decoders and transcoders in support of new ADSB-compatible in-home media devices that were launched by multiple consumer electronics customers in Japan.

As communicated on past calls, Japan recently became the first country to roll out a next-generation TV broadcast standard that supports over-the-air terrestrial broadcast in 4K resolution and HDR video quality. Previous-generation consumer electronics devices in Japan, including an existing installed base of 4K TVs, are not compatible with this new standard. As a result, the rollout of this higher-quality terrestrial broadcast signal has triggered what is expected to be a meaningful upgrade cycle among Japanese consumers.

As announced in December, Pixelworks XCode 6830 decoder platform provides compatibility for this new ADSB standard in several in-home media devices recently launched by Sharp, I-O DATA and Maspro. In addition, Sharp's newly released ADSB-compatible, AQUOS 4K Blu-ray recorder also incorporates Pixelworks' XCode 5190 transcoder to offer advanced personal video recording and streaming capabilities including the ability to watch recorded content on WiFi-connected tablets and smartphones.

Also within video delivery, we are working to further cultivate and capitalize on emerging growth opportunity -- on the emerging growth opportunity in over-the-air broadcast or OTA market. During the fourth quarter, we continued to support existing customers that leverage Pixelworks' transcoding SoC solutions in their OTA streaming products. This includes our previously announced design wins on several newly launched customer products in 2018 such as Hauppauge's Cordcutter TV with dual-tuner OTA streaming; Nuvio's Tablo family of OTA DVR devices; and AirTV's launch of its local channels' DVR capability.

As consumers become increasingly aware of the ability to stream and record free OTA broadcast content, we expect to see a growing number of service providers incorporate OTA content into alternative video delivery platforms. Looking forward, we are well positioned in our Video Delivery business across an increasingly diverse group of engagements with lead customers on next-generation in-home media devices. We expect a number of these video-centric consumer products to be launched by customers in 2019 and contribute to continued robust growth year-over-year.

Turning to Mobile. 2018 was a transformative year for our Mobile group with revenue growing 75% over the prior year fourth quarter and nearly 90% for the full year. This growth reflects the continued ramp of volume production orders for both our third- and fourth-generation Iris visual processors in support of wins on previously launched smartphones.

Also highlighting our increased traction in 2018 were our announced wins on 5 smartphones across 4 OEM customers resulting in increased volume shipments of both our third- and fourth-generation Iris visual processors.

In conjunction with our customers' official product launches, we announced 2 of these wins during the fourth quarter, the Black Shark Helo and the Nokia 7.1. The Black Shark Helo represented our second win with Xiaomi-backed Black Shark for a smartphone specifically targeted at avid gamers. This gaming phone incorporates Pixelworks' third-generation Iris chip and features Pixelworks' industry-leading MEMC processing and Always-HDR mode technology to deliver superior display performance and an unmatched mobile gaming experience.

Also launched during the quarter, the Nokia 7.1 became the first smartphone to combine Pixelworks' fourth-generation Iris alongside Qualcomm's 636 apps processor and be uniquely positioned as a mid-tier smartphone with flagship quality display performance. Leveraging the advanced visual processing technology in our fourth-generation Iris, the Nokia 7.1 offers real-time SDR to HDR conversion and is among the exclusive list of devices that are HDR-certified by Amazon.

And as the most recent evidence of our focused efforts to seed adoption across a larger portion of the addressable smartphone market, last week, we jointly announced the strategic partnership with HMD Global to incorporate Pixelworks' Iris technology in a broad range of Nokia's next-generation smartphones. Although the terms of the agreement currently preclude Pixelworks from providing details about the number of models, targeted geographies or product profiles of these future Nokia smartphones, what I can say is this partnership consists of more than a simple supply agreement or a commitment to incorporate our device. The 2 companies are committed to evangelizing advanced visual processing to a wider set of consumers.

Similar to our previous announcement on the launch of the 7 -- Nokia 7.1, we will be able to announce the model that incorporate Pixelworks technology as these individual smartphones are publicly launched under the Nokia brand.

More broadly within our mobile business, our current pipeline of active customer engagements continues to expand. To help put that current level of activity in context, on our fourth quarter conference call 1 year ago, I mentioned that we were engaged with 8 OEMs and on 10 active programs. Today, the number of active customer engagements is larger and of higher quality with active programs more than double a year ago.

A large number of these programs are targeting to use our fourth-generation Iris processor, which was originally designed with a specific goal of lowering the barriers for OEM adoption. Today, we are seeing increasing number of engagements focused on the gen 4 device to offer a noticeably differentiated display experience on aggressively priced mid-tier smartphones.

And now having taped out our newest Iris processor during the fourth quarter, we have multiple OEMs with development boards awaiting samples of our fifth-generation Iris visual processor. We are on track to begin sampling preproduction volumes of the fifth-generation Iris by the end of the current quarter.

To close out my prepared remarks, and looking into 2019, we are focused on realizing the next leg of growth and targeting expanded opportunities across flagship and mid-tier devices in mobile as well as next-generation consumer platforms for high-quality video delivery and streaming. As we execute on our growing pipeline of customer engagements and ramp additional production orders, we expect to deliver continued year-over-year growth in both our mobile and video delivery end markets with the potential of that growth to accelerate significantly toward the second half of the year.

With that, I'll turn the call over to Steve for a more detailed review of our fourth quarter financial results and guidance for the first quarter. Steve?

Thank you, Todd. Revenue for the fourth quarter of 2018 was $20.5 million compared to $21.5 million in the third quarter and revenue of $18.4 million in the fourth quarter of 2017. The year-over-year increase in fourth quarter revenue reflects growth across all 3 of our target end markets.

The breakdown of revenue during the fourth quarter was as follows: revenue from digital projector was approximately $16.4 million, which included roughly $1.5 million in planned end-of-life product revenue; Video Delivery revenue was approximately $3.4 million; and revenue from Mobile was approximately $750,000.

Non-GAAP gross profit margin was 55.1% in the fourth quarter of 2018 compared to 54.7% in the third quarter of 2018 and 56.9% in the fourth quarter of 2017.

Non-GAAP operating expenses were $10.3 million in the fourth quarter of 2018 compared to $8.9 million in the third quarter of 2018 and $10.6 million in the fourth quarter of 2017. Note, lower operating expenses in the third quarter of 2018 reflected the recognition of approximately $1.8 million of offsets to R&D associated with our co-development project with a large projector customer. In the fourth quarter of 2018, we recognized the remaining $220,000 of offsets to R&D, which represented the final offset associated with this now completed co-development project.

Adjusted EBITDA was $1.8 million for the fourth quarter of 2018 compared to $3.8 million in the third quarter of 2018 and $778,000 in the fourth quarter of 2017. A reconciliation of our adjusted EBITDA to GAAP net income/loss may be found in today's press release.

We reported non-GAAP net income of $1.1 million or $0.03 per diluted share in the fourth quarter of 2018 compared to non-GAAP net income of $2.5 million or $0.07 per diluted share in the prior quarter and a non-GAAP net loss of $379,000 or a loss of $0.01 per share in the fourth quarter of 2017.

Moving to the balance sheet. We ended the fourth quarter with cash, cash equivalents and short-term investments of approximately $24 million, effectively flat with the prior quarter. Other balance sheet metrics include days sales outstanding of 31 days at quarter end compared to 24 days at the end of the third quarter of 2018. Inventory turns during the fourth quarter of 2018 were 12.3x compared to 12.9x in the prior quarter.

Our guidance for the first quarter of 2019 is as follows. We expect revenue to be in a range of between $15.5 million and $16.5 million, which largely reflects more than typical first quarter seasonality in the digital projection market combined with our expectation for continued year-over-year growth in our mobile and video delivery end markets. We expect non-GAAP gross profit margins of between 49% and 51%. Margins will be temporarily impacted by the mix within projector and lower overhead absorption on lower revenues.

For operating expenses, we expect the first quarter to range between $10 million and $11 million on a non-GAAP basis. As previously mentioned, note that we do not anticipate any offsets to R&D in the first quarter.

And finally, we expect first quarter non-GAAP EPS to be in the range of between a loss of $0.04 and $0.09 per basic share. The after-tax net gain of $3.9 million for the sale of patents will be recorded as a GAAP gain in other income and will not affect non-GAAP earnings.

With that, we will now turn -- we will now open the call for questions.

(Operator Instructions) our first question comes from the line of Charlie Anderson with Dougherty.

So Todd, you had talked about projector, what's going on there, right? There's kind of a macro issue, right, that a lot of people are seeing and then you've got the customers transition issue, I guess it is. I wonder if you could maybe just give us a little bit more color on how you think the macro issue impacts sort of the whole year, kind of what you see in real-time there. And then as far as the customer transition, maybe just a little bit more detail on exactly why that creates a gap or impacts the typical seasonality. And then I've got a follow-up.

Okay. Thanks, Charlie. So the macro environment, what we saw is coming at the tail end of the fourth quarter. We saw some distributor inventories start to rise, meaning shipments that we shipped did not ship through to the customer. I wouldn't say it's out of the range of normal distribution inventories. But as we start to look into the reason why, we found out that some of our customers, not all of them, but some of them were impacted by poorer results than expected in the tender business in the fourth quarter, particularly in China, meaning they go out and bid large installations, educational installations, and these came in less than what they expected. And then what that means is we end up seeing softer backfill orders for Q1. This is built into our guidance. For the most part, the inventories are not out of line. I don't see this as being a big correction. But from what I can tell from other guys in the semiconductor industry, some people are anticipating a robust second half. I'm not sure I'm there yet. I have to see the catalyst for that. And then as far as the second part of the question, why we expect this transition at our large customer to dampen the seasonality, so I think I've said this on the previous call is the new SoC that we have with this large customer will replace our existing SoC but will replace as new models get introduced. That will happen at the very tail end of this year into the beginning of 2020. When that happens, the ASP is lower on the new device but the margins are higher. But the margins are not high enough to make up for the loss of the ASP dollars that we see on the existing device. So it will have somewhat of a dampening effect on revenue. It will help us -- the cumulative margins out of our projector business should get better as that transition goes, but overall revenue will have a little bit of a dampening effect.

Great. And then on Mobile -- sorry, did you want to finish?

No. I was just going to say to put it into context, right now, we anticipate that transition starting late in the year, right, so mainly in the fourth quarter. We usually don't give annual guidance, but I thought it was important to get relevant information out there.

Yes, that makes sense. Okay. So on Mobile, it sounds like there's a ton of activity there and a lot of the activity sounds like it's tied to the Iris 4 chip. So that's great. So seeing that we started this baseline in Q4 of 750k or so, maybe just help us understand how the ramp goes over the course of the year? And then to what degree does Iris 5 or fifth generation play a part this next year or is that more next year. Any more commentary on Mobile would be helpful.

So we have new phones launching with Iris 3 and Iris 4 in the front half of the year and we have phones launching midyear on, I mean this is all anticipated so subject to change, but we have phones launching with Iris 5 in the middle of the year and the tail end of the year. Today, we have several customers that have developed boards awaiting Iris 5 samples. We have not sampled customers yet. We expect to sample customers late in the quarter we're in. Remains to be seen whether we hit -- I mean, right now, the fab is on target, right? So that's as much as I can say. This is the first time we've had this much customer activity lined up for early-stage samples. So we're fairly confident that this device is going to work first spin, but you never know in this industry.

Our next question comes from Richard Shannon with Craig-Hallum.

Maybe a follow-up on the projector topic. I think it's been a while since I asked you this question, but can you maybe tell us how much of your business typically on an annualized basis comes from China?

Well, our business doesn't really come from China. Our business -- we have some. We sell into a couple of ODMs that are Chinese ODMs that do business for both name brand, Japanese projector vendors, but also under their own name brand in the China market. But the majority of our projector business comes via the Japanese manufacturers and we ship into Japan. So if you look at our revenue, it's Japanese revenue. But if you look at where they sell their projectors, China's the #2 economy in the world and it's rapidly developing and they've had big infrastructure build-outs, and that's where projectors go. I still don't think it's the #1 market for many of these companies but it's getting close. So I don't know the exact percentages, but I would guess in the 30% to 50% range of their business is in China.

Okay. That is helpful, and I was looking for end demand. So thanks for anticipating that. Let's see here, question on Video Delivery. Been talking for a couple of quarters about the broadcast upgrade in Japan and if you can kind of look backwards and see since getting some demand indicators, maybe summer to fall of last year till now, how has that responded since then? And are you seeing any reasons for more or less optimism looking forward?

Good question. So as you know, I think the last time we chatted, it was right before the official launch of the ADSB 4K HDR broadcast digital signal in Japan. I think they launched it on December 1. Our call was slightly before that, so we talked that it's about ready to happen. We had quite a strong Q3 and Q4 in buildup of inventory on both the set-top converter boxes and 4K HDR PVRs. So what I can tell you now, let's call it 2 months since the broadcast channel went live, there are 16 4K channels that are live and I think there's even 1 8K channel. I don't know how much content's on it, but all of this is broadcast live. Our partners have seen very robust demand for both the set-top box and the PVR. So we've seen an increased demand into Q1 based upon those customers backfilling their inventory. So part of it I think there's strong demand for these converter boxes and people anticipating this, wanting to see high-quality content over the broadcast network. But secondly, our partners sort of -- they were the first with full-featured products with plenty of inventory in the channel. The traditional leader in this market that has had trouble shipping and I think they've had some technical problems with their product, and so this has also created an opportunity for our partners to increase what they anticipated as their market share over the first quarter since launch.

Okay, that is very helpful and useful. Thanks for that, Todd. One last question for me. You made a couple of comments about growth, I can't remember the exact adjectives you used, but I'll use the word robust growth in both Mobile and Video this year. Just to help us try to think about how to model this, do one of those segments add more dollars worth of growth to 2019 than the other? Or are they kind of similar?

Well, from a growth perspective, Mobile will definitely be a higher-growth business than Video Delivery. From a straight-up numbers perspective, I actually expect Video Delivery will probably be a more -- a bigger number at the end of the year. But just remember, I mean, Mobile is starting from under $3 million last year, Video Delivery is just under $12 million last year. So I'm giving you guidance -- somewhat of an annual guidance, which I usually don't do.

No, I think that's pretty helpful. I know there's a big difference between the 2 bases, so just trying to get a sense of that. So that's very helpful.

Our next question comes from Suji Desilva with Roth Capital.

Digging into the potential growth for the Mobile Iris product in '19, is it anticipated that it would be the existing customers continuing to ramp that will drive the growth? Or is it more of a contribution of some new customers that would be new in '19 that haven't been in '18? What's kind of the expectation kind of where the growth comes from?

Yes. I knew I'd get a chuckle out of you. The answer is both. The existing customers -- we expect to definitely grow our unit volume shipment with all of the existing customers that we engaged with last year with maybe the exception of one, they're struggling mildly. There's one Chinese vendor that had an issue with the Commerce Department and I think they're struggling and recovering from that. I don't think it has anything to do with us. I don't think it has anything to do with demand in the mobile marketplace, I just think they are struggling. But the others, we definitely anticipate year-over-year growth and expanded models with. And then of course, we are anticipating new customers to be announced.

Okay, sounds very promising there. And then just can you remind us on the gen 4, what the incremental features are that are just getting so much attention out of the gate for you guys?

The gen 4, the incremental features are lower barriers of entry, much lower power consumption than gen 3 and lower cost as well as probably half the footprint on the board. Part of that is we took a feature out from gen 3 that requires a lot of memory and thus require power consumption in an active mode. On our gen 5, we're putting -- we're making it a much more full-featured chip, but it's a new process technology and we've innovated in a way that we've kept the power consumption and the total footprint on the board much lower than the third generation. So for those customers that liked that feature, and there's a couple of other features in there, but specific this one that took the memory, they're moving to gen 5 over time.

Got it, that's really helpful. And then just last question for me, Todd. The relationship we have with Nokia, I know you can't talk HMD -- I know you can't talk about it much, but is this kind of our type for relationships with other customers? Or is this a unique situation for HMD that made this attractive? And if so, what was unique about HMD? I guess, any color there would be helpful if you could provide it.

I wouldn't -- so first of all, this is a unique arrangement we have with HMD. Part of it is their approach to growth in the market and their approach is to grow on a global basis and the focus on regions that still will have sustained subscriber growth. And so this is going to be India and southeast Asia, possibly Africa, but they are very focused in India and Southeast Asia. And the price points to be successful in these markets where the growth is are much lower than developed countries. And so their focus is to offer a broad product portfolio and a differentiated product portfolio, but at fairly aggressive price points, right? And they want to bring enhanced display and visual experience to that market, and they want to partner with us to do that. So that's a very good relationship for us. It's a long relationship, we expect it to be successful. They've been successful over the last 2 years since they reemerged under the Nokia brand. The nature of the relationship has many different aspects to it, some of those could be duplicated with other customers. So I wouldn't count that out. I wouldn't say that it's so unique that it's an HMD only, but today we're fairly happy with the collaboration between the 2 companies.

That's helpful. It strikes me that I think it's what made Nokia successful the first time around.

(Operator Instructions) Our next question comes from the line of Jaeson Schmidt with Lake Street Capital Markets.

Just following up on your comments about growth in Mobile coming from both new and existing customers, I apologize if I missed it, but I know you indicated that the active program has more than doubled compared to a year ago. But what does the customer count look like compared to last year?

It's definitely increased. I'm not going to call out how many customers are there, but it's increased over -- I think I listed 8 customers last time. It's increased quite a bit. And I would say that the quality, there's a couple of customers on there that we would consider Tier 1 focus customers for us and they weren't part of that initial list. So the expansion into the quality of the content in customer engagements, I think that's the important part, not the total increase.

Okay. And I know you don't expect any R&D offsets here in Q1, but is there the potential for any in the remainder of this year?

Well, there certainly is -- we're working on a couple of programs both what I would -- it could be considered an NRE or co-development depending on how they come down and we're working on a couple of them. But if we land them, remember, when we do these co-development agreements, the money is paid by the customer go to offset R&D costs. Usually, the upfront R&D costs are IP related. We do outsource a lot of our front-end work on ASIC. If you recall, when we reorganized the company in 2016, we partnered with a couple of different companies that do both front-end and back-end design. We do architecture, some front end. So those upfront costs usually absorb whatever portion in the beginning of a design that we get in from a co-development agreement or an NRE. The latter portion of the design, the dollars go to offset our own internal costs. So they flow down to the bottom. And that's what you saw last year with the previous co-development agreement. It was a 2-year agreement. The first $4 million in the first year were pretty much absorbed on IP- and outsource-related activities. And then approximately $3.5 million out of the $4 million in the second year rolled against our own expenses, which does help us on our P&L. And so yes, it's a long-winded answer. But we do expect, or we are on a hunt, to close at least one of those 2 deals this year. But most of that offset will go towards outsourced activities.

And that concludes today's question-and-answer session. I'd like to turn the call back to management for any closing remarks.

So it's an interesting start to the year, but this -- the headwinds in the projector business, certainly something we didn't completely anticipate but we don't think we can -- we're having problems overcoming it. And we're very excited about the growth business, especially Video Delivery, given where our head was at 6 months ago. But we're still very excited about Mobile. I don't want people to think we're not excited about Mobile, we are. But the Video Delivery business has also -- has piqued our interest. So thanks, everybody.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, and you may now disconnect. Everyone, have a great day.