Lantronix , Inc. (NASDAQ:LTRX), a global provider of secure data access and management solutions for the industrial Internet of Things (IoT), reported an 18% increase in total revenues for the second quarter of fiscal year 2024, reaching $37M. Despite a net loss of $2.6M and a reduction in headcount, the company provided an optimistic outlook for the remainder of the fiscal year, with expectations of record revenue and strong growth in non-GAAP earnings. Lantronix's President and CEO, Saleel Awsare, emphasized the company's technological leadership and strong product pipeline, while CFO Jeremy Whitaker acknowledged a slowdown in sales for embedded IoT solutions and a push-out of a significant design win.
Key Takeaways
- Lantronix reported Q2 revenues of $37M, marking an 18% year-over-year increase.
- The company expects record revenue for fiscal 2024 with organic growth between 18% to 26%.
- A net loss of $2.6M was recorded, alongside a reduction in headcount by 7% in Q2.
- Q3 revenue is projected to be between $38M to $42M, with non-GAAP EPS of $0.09 to $0.13 per share.
- Annual guidance for fiscal 2024 has been updated to $155M to $165M in revenue and non-GAAP EPS of $0.35 to $0.45 per share.
- The updated guidance reflects a slowdown in channel business and a deferred embedded compute design win.
Company Outlook
- Lantronix anticipates over 50% growth in non-GAAP earnings for fiscal 2024.
- The company's first volume shipment to a smart grid customer is expected to significantly contribute to the year's revenue.
- Lantronix is focusing on near-term guidance, moving away from providing long-term projections.
Bearish Highlights
- A general slowdown in the macro environment is affecting sales forecasts for embedded solutions.
- A key embedded compute design win in video applications has been delayed to fiscal 2025 due to certification requirements.
- Certain legacy products are experiencing a lower run rate post-COVID-19 resurgence.
Bullish Highlights
- The ramp with smart grid customer Enel (BIT:ENEI) is progressing well, with no significant issues and purchase orders expected in the second half of the year.
- Lantronix sees growth opportunities in the compute and edge compute sectors.
- The company has identified cost synergies and eliminated duplicative functions, streamlining operations.
Misses
- Lantronix missed street expectations by $20M, with excess inventory and customer push-out each accounting for half of the shortfall.
- The company is adjusting its strategy to focus on near-term growth and performance metrics.
Q&A Highlights
- CEO Saleel Awsare discussed his background and the strategic initiatives he is leading, including a portfolio review to optimize ROI and growth.
- CFO Jeremy Whitaker elaborated on the macroeconomic slowdown's impact on customer inventory levels and the subsequent forecast adjustments.
- The sales funnel's size is satisfactory, but the company is taking time to assess details for future guidance.
Lantronix's second quarter of fiscal 2024 showcased a mix of challenges and achievements, with record revenue juxtaposed against a net loss and lowered expectations for certain product lines. The company's leadership remains confident in their strategic direction, emphasizing strong customer engagement and a robust product pipeline as key drivers for future growth. As Lantronix navigates a shifting macroeconomic landscape, it continues to adapt its approach, prioritizing agility in its operations and transparency in its financial guidance.
InvestingPro Insights
Lantronix, Inc. (LTRX) has shown a dynamic financial performance in the last quarter, with several key indicators worth noting. The company's market capitalization stands at $216.51M, reflecting the market's current valuation of Lantronix. Despite a challenging macroeconomic environment, the company's revenue for the last twelve months as of Q1 2024 was reported at $132.43M, with a slight quarterly revenue growth of 3.89%. This growth aligns with the company's reported increase in total revenues for the second quarter of fiscal year 2024.
Investors should note that Lantronix's P/E ratio is currently negative at -23.27, which is adjusted to -24.51 for the last twelve months as of Q1 2024. This indicates that the company has not been profitable over the past year. However, the gross profit margin stands at a healthy 42.7%, showing the company's ability to maintain a strong profit rate on its sales.
An InvestingPro Tip suggests that net income is expected to grow this year, which could signal a turnaround for the company's profitability. Another tip indicates that analysts have revised their earnings upwards for the upcoming period, reflecting a positive sentiment towards Lantronix's future financial performance.
For readers who are considering a deeper analysis of Lantronix, there are additional InvestingPro Tips available, which provide more comprehensive insights into the company's financial health and stock performance. For instance, there are tips on sales growth expectations, stock price volatility, and the company's debt level. In total, there are 13 additional InvestingPro Tips for Lantronix, which can be accessed through InvestingPro's platform.
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Full transcript - Lantronix (LTRX) Q2 2024:
Operator: Good afternoon and welcome to the Lantronix Second Quarter 2024 Results Conference Call. All participants will be in listen-only mode. [Operator instructions] Please note this event is being recorded. I'd now like to turn the conference over to Rob Adams. Please go ahead.
Rob Adams: Good afternoon, everyone, and thank you for joining the second quarter fiscal 2024 conference call. Joining us on the call today are Saleel Awsare, Chief Executive Officer, and Jeremy Whitaker, Chief Financial Officer. A live and archived webcast of today's call will be available on the company's website. In addition, you can find the call-in details for the phone replay in today's earnings release. During this call, management may make forward-looking statements, which involve risks and uncertainties that could cause our results to differ materially from management's current expectations. We encourage you to review the cautionary statements and risk factors contained in the earnings release, which was furnished to the SEC today and is available on our website and in the company's SEC filings, such as its 10-K and its 10-Q. Lantronix undertakes no obligation to revise or update publicly any forward-looking statements to reflect future events or circumstances. Please refer to the news release and the financial information in the Investor Relations section of our website for additional details that will supplement management's commentary. Furthermore, during the call, the company will discuss some non-GAAP financial measures. Today's earnings release, which is posted in the Investor Relations section of our website, describes the differences between our non-GAAP and GAAP reporting and presents reconciliations for the non-GAAP financial measures that we use. With that, I'll now turn the call over to Saleel Awsare, Lantronix's President and CEO.
Saleel Awsare: Thanks Rob, and thank you, everyone, for joining us on the call today. I'm happy to be speaking to you for the first time since I joined at the end of November. I'm pleased to report record results for the second quarter of FY 2024 with total revenues of $37 million in FY Q2, an increase of 18% compared to the same period of FY 2023, and an increase of 12% over the last quarter and we expect record revenue for fiscal 2024. I'm optimistic about the future of Lantronix, given our wide array of leadership in technology, strong product pipeline, and growing customer engagement. I thought it would be helpful to provide some of my background and why I joined Lantronix, as well as also discuss some of the initiatives that I'm driving in the short term. For more than 25 years, I've navigated the high-tech landscape, driving successes across hardware, software and services. Most recently, I was the Senior Vice President and General Manager of the Enterprise and Mobile Business at Synaptics (NASDAQ:SYNA), the company's largest division. Prior to that, I ran the IoT division. While at Synaptics, I made significant changes streamlining operations, prioritizing customer centricity, and implementing robust go-to-market methodologies that led to significant gross margin and profitability improvements. Across multiple companies, including Conexant, Winbond and Synaptics, I've established a track record of business performance improvement across a range of metrics. When the Lantronix opportunity was presented, it was quickly apparent to me that there is much potential to be unlocked. The macro trends of IoT are accelerating and Lantronix, with its unique portfolio of secure, compute and connect solutions is perfectly positioned to capitalize on this momentum. From wireless routers, programmable telematics, out-of-band management, edge compute modules and a rapidly growing secure custom solution business, we have the breadth and depth to be the differentiated and trusted vested supplier of IoT solutions, providing unparalleled global reach and coverage. As the new President and CEO, I see myself as a steward of shareholder capital, and I take that responsibility seriously. You'll find me direct, results-oriented and focused on building a profitable, growing business. In my first 60 days, I met with many customers, partners and employees, immersing myself in our strengths and opportunities. However, my focus remains on enhancing performance. We've launched multiple initiatives, including the strategic portfolio review, delving deeply into various areas like engineering, operations, and marketing. In FY Q2, we made our first volume shipment to our smart grid customer, and we have the backlog in place to drive a strong ramp for the remainder of the year. In FY 2025, we expect to transition to a run rate business, receiving purchase orders against our existing design win, and in line with lead times. Having just met with a customer in Europe, I'm happy to say that the relationship has deepened, and I expect this to be a long-term engagement. Other noteworthy business highlights include the commencement of volume shipments of our Fox3 gateway device to a major telecom carrier. This device enables tracking, data collection, communication and diagnostics in power-critical applications. Initial deployments will be generators supplying cell towers. This adoption is driven by mandates in power backup systems and state energy reporting standards and finally, our out-of-band products continue to perform well with our large enterprise customers resuming purchases. Before I hand over the call to Jeremy to review the Q2 financials in more detail, I'd like to conclude by saying I'm really excited about the opportunity ahead at Lantronix. Since I've been on board, I've been impressed with our team, the broad portfolio of technology and IP, and our great customers. We have a lot of work ahead of us as we continue down the transformation, but I'm confident we have the building blocks in place to drive Lantronix to become an even stronger company built on differentiated and sustainable franchises that generate profitable growth. I'll now turn over the call to Jeremy Whitaker, Lantronix's Chief Financial Officer.
Jeremy Whitaker: Thank you, Saleel. Now I will provide the financial results and some business highlights for our second quarter of fiscal year 2024 before commenting on our financial targets for the remainder of the fiscal year. For FQ2 2024, we reported revenue of $37 million, an all-time record for Lantronix, driven by initial production shipments to a smart grid solutions provider. Revenue was up 12% and 18% from the sequential and year-ago periods, respectively. IoT system solutions increased by 21% and 54% from the sequential and year-ago periods, respectively. The increase was primarily driven by initial production shipments for our lead smart grid customer, as previously noted. In addition, the year-over-year increase was impacted by strong sales from out-of-band deployments. For the remainder of the fiscal year, we expect continuing growth from our IoT system solutions, driven by the production ramp of our smart grid customer, continued strength in out-of-band, and telematics' asset tracking solutions to a Tier 1 telecom carrier. Sequentially, embedded IoT solutions were up 3%, with meaningful contribution from our lead EV customer design-in. As expected, we experienced a year-on-year decline in embedded IoT solutions, as the year-ago period included a large enterprise video customer design win that ended in FQ4 2023. In FQ2 2024, software and service revenues were down sequentially, primarily a function of the completion of two large design services projects that have transitioned into production. GAAP gross margin was 40.6% for FQ2 2024, compared to 42.7% in the prior quarter and 43.8% in the year-ago quarter. Non-GAAP gross margin was 41.6% for FQ2 2024, compared to 44% in the prior quarter and 44.6% in the year-ago quarter. The decline in gross margin was primarily a function of a change in product mix from the prior quarter and increased logistics costs. For FQ3 2024, we expect gross margins in a similar range. GAAP SG&A expenses for FQ2 2024 were $10.2 million, compared with $9.8 million in the year-ago quarter and $9.2 million in the prior quarter. The sequential increase in GAAP SG&A was primarily due to costs related to variable and share-based compensation, partially offset by cost-cutting activities. GAAP R&D expenses for FQ2 2024 were $4.7 million, compared with $5.1 million in the year-ago quarter and the prior quarter. The decline was primarily related to cost-cutting efforts. Company-wide, we reduced headcount by approximately 7% during FQ2 2024. Over the last several quarters, we have reduced headcount by approximately 10%, as part of our ongoing efforts to capture cost synergies from our previous acquisitions, run the business more efficiently, and improve operating margins. GAAP net loss was $2.6 million, or $0.07 per share, during FQ2 2024, compared to GAAP net loss of $2.6 million, or $0.07 per share, in the year-ago quarter. Non-GAAP net income was $2.9 million, or $0.08 per share, during FQ2 2024, compared to non-GAAP net income of $1.4 million, or $0.04 per share, in the year-ago quarter. Now turning to the balance sheet, we ended FQ2 2024 with cash and cash equivalents of $22.1 million, an increase of $2.7 million from the prior quarter. Working capital was $51.9 million, an increase of $1.8 million from the prior quarter. Net inventories were $42.8 million as of FQ2 2024, a decrease of $3.0 million from the prior quarter. Now turning to our outlook; for the third quarter of fiscal 2024, we expect revenue in a range of $38 million to $42 million, and non-GAAP EPS in a range of $0.09 to $0.13 per share. For fiscal 2024, we are updating our annual guidance to revenue in a range of $155 million to $165 million, and non-GAAP EPS in a range of $0.35 to $0.45 per share. The change in our annual guidance is primarily due to lower expected sales for our embedded IoT solutions as a result of two factors. A general slowdown in our broad-based channel business as customers work through their inventories, and an embedded compute design win in video applications that was slated for revenue in the second half of fiscal 2024 that pushed into fiscal 2025. We remain optimistic on the business and are on track to deliver a record year on both the top and bottom lines with 18% to 26% organic revenue growth and over 50% growth in non-GAAP earnings. With that, we complete our prepared remarks for today. So I will now turn it over for the operator to conduct our Q&A session.
Operator: [Operator instructions] And our first question will come from Scott Searle of ROTH MKM. Please go ahead.
Scott Searle: Good afternoon. Thanks for taking the questions. Saleel, congratulations and welcome aboard. Maybe just to dive in quickly on the outlook, a little below expectations, it sounds like you've got a design win on the embedded push front. I wonder if you could provide a little more color and clarity in terms of how the Enel [ph] ramp is going, how you're thinking about a Phase II opportunity with them, and what the channel level of inventory looks like at the current time. And is there any other risk to slippage of a larger customer like you're talking about on the embedded front that's slipped?
Saleel Awsare: Hey, Scott, thanks for the question. Let me start with the Enel ramp, and then I'll pass it to Jeremy for some of the other questions that you asked. So, as I said, I was in Europe meeting our customer, who is a customer of Enel's, if you put it precisely and that ramp is going well. Systems are now getting deployed in the field, and we have no showstoppers and as I said in my prepared remarks, we've got good backlog until the end of June for the fiscal year and as we transition this business into more of a run rate kind of business, we will be getting in purchase orders for the second half of the year. I expect to get purchase orders for the second half of the year, and we'll ramp with them as we move forward. Now, there is a big build-up as they start the deployment, especially in our calendar Q3, I mean, our fiscal Q3 and Q4. It'll slow down just a little bit as we go into the second half of the calendar. Jeremy?
Jeremy Whitaker: Yes, Scott, you had a question regarding distributor inventories?
Scott Searle: Yes, Jeremy, just on the embedded front, it sounds like you're working down some elevated inventory levels. I'm wondering if you could give us an idea about channel inventory weeks or otherwise to kind of help us calibrate. And then on the design win that slipped out, the visibility and the comfort to that, that that is going to, in fact, ramp in September and December.
Jeremy Whitaker: Yes, so starting with channel inventories and what we're hearing back from our sales team as it relates to end customers, a lot of that business is going to a broad-based, customer-base, a lot of it in industrial IoT connectivity and embedded solutions in that area and what we heard back from our sales team is that there are customers that are working down inventories, and that was -- and also a general slowdown in the macro that is impacting customers. And for that reason, we brought down our forecast for our embedded solutions for the second half of the fiscal year. As it relates to the push-out of our one embedded compute customer in video applications, as far as we understand from talking with the sales team and their interaction with the customer, is that they are on track to go into production in fiscal '25, or I would say have more of a ramp. They're already -- are buying some product from us at this point, but the actual ramp of their production has slipped into '25.
Saleel Awsare: Just let me add a little bit more color, Scott. This is a video conferencing system, and they need to go through some certification. You might be familiar with it, like things like Teams and stuff. Usually, this takes a bit longer than you anticipate, and that's, I think, what they're going through right now.
Scott Searle: Got you. Very helpful. And if I could, one follow-up, so I know it's still early, so this is perhaps a bit unfair, but I'm wondering if you could give us some insight into how you think about the growth of the business as we get into fiscal '25, not necessarily to give guidance, but are you comfortable that this is a double-digit or a mid-teens kind of growth business, given the product portfolio and the customer interactions that you've had? And as part of that, the gross margin profile that you're thinking about now that you see in the blended business and product offerings, if you give us some insight on that front. And if I could throw in as well, edge compute is becoming a bigger and bigger discussion point within the industry. You guys have a lot of components on that front that have led to business over the past several years. I'm wondering how you see that evolving and your position in the marketplace there. Thanks.
Saleel Awsare: Yeah, so I think it's a little too early for me to get into the specifics of fiscal '25 from percentages and numbers, but we have all the right things in this company, as I said, as I move forward to compute and connect and our compute business is growing quite a bit. Almost it grew 60% from fiscal '23 to fiscal '24, just to be clear, as that we are projecting it to grow. So I expect that to be a growth driver as I look into the future. Now, going specifically to the edge compute, you're right. We do have some great technology and products. Its early days, but I do see some momentum into it in fiscal '25 for those specific areas. And we are doing, Scott, really a deep dive into the product portfolio starting in March called the Strategic Program Review. This is something that I've done in the past, and I'm going to spend probably a better part of a week with our business teams and also the engineering teams trying to go through every product line, understand our strength, our weakness, and look at the ROI and the growth in that area. So I'll be able to give a better view about this in the May call or so.
Operator: The next question comes from Mike Walkley of Canaccord Genuity. Please go ahead.
Mike Walkley: Thanks for taking my questions, and I'll try to keep them a little briefer than multipart here. Saleel, just welcome aboard. I look forward to working with you. You mentioned you're in the midst of a strategic portfolio review, but given your short tenure at Lantronix and with your unique industry background, do you see any low-hanging fruit right away in terms of, like, go-to-market or distribution channels that you think can help expand Lantronix's reach?
Saleel Awsare: You know what? I've done my first QBR with the team just a few weeks back. I wouldn't go into low-hanging fruit. There are areas that I can look at that we can go with customers that I might have worked with in the past and as I look at the future. But as I said earlier, I think the Compute and Connect portfolio that we have is really very good as I think about it in the future. And I'll get you more details as I go through the quarter and go through the review, because that's when I'm going to get really my teeth into it to understand what, if any, low-hanging fruits there are and I've done this in the past. It's a great question. What can we do more? Where can we go do more? And I'll just digress and give you one little piece, which I've really gravitated and I understand it's kind of differentiated here, which is the out-of-band. That out-of-band area, you know, Lantronix is a leader. Not a lot of people in this space. As folks like NVIDIA (NASDAQ:NVDA) and stuff roll out these new pods for data centers for AI, they all have this out-of-band port in there. Not being exercised yet, but as I think about that, can that be a low-hanging fruit? Maybe. But again, give me a little bit more time, but I think there are things here that we can really go after.
Mike Walkley: Great. That's helpful. And just to follow up maybe for you and or Jeremy, as you start to meet with customers and you look at the longer-term opportunity, in the past Lantronix has shared, kind of number of large deals in the pipeline. I think maybe the last time it was around 40 deals and $150 million. Any update on that pipeline opportunity?
Saleel Awsare: Yeah. So let me talk about the funnel, and this is something I've spent a lot of time when I was at Synaptics. The funnel is a great thing that you really want to understand. So as I said, I went through the QBR with our sales team and marketing team just a few weeks back, and I'm very pleasantly surprised at the size of the funnel. But before I report back on the specific numbers, and I am very familiar there's a number out there, I'm going to go just do a much more of a deeper dive, understand it, and see, you know, where we are with each of the programs in the funnel with respect to the schedules and stuff like that. So just give me a little bit of time, but so far I'm happy with what I saw with the funnel.
Mike Walkley: Great. Thank you. Last question for me, and I'll pass the line. Jeremy, just in terms of the reduced fiscal '24 guidance, can you just help maybe rank order, the different issues between inventory at some of your customers and this project getting pushed, and were there any other impacts to the guidance, or were those really just the two main issues?
Jeremy Whitaker: I would say those are the two main things that came out of our QBR several weeks ago after we reviewed the forecast with the sales team, both primarily coming out of the embedded business, relatively, I would say, evenly split between kind of a broad-based expected decline from our connectivity business, embedded connectivity business, which is mostly wired products, a little bit of wireless, but not as impacted by that, and then the compute customer and the video application that I mentioned previously. So those were the primary drivers for the reason to bring down our numbers for the second half of the fiscal year.
Operator: The next question comes from Ryan Koontz of Needham and Co. Please go ahead.
Ryan Koontz: Thanks for the question. Just thinking about this from a different angle here on the second half outlook change, sounds like the core business, what I think of as the core business, dating back the last couple years, that that's where the big headwind here is on your embedded, and so that's looking like it's going to -- is that stepping down in its run rate materially into your fiscal second half? Jeremy, is that how you think about it?
Jeremy Whitaker: Yeah, I would say it's lower than what we would have originally anticipated. I'm not sure if it's taking a major step down, but many of these are legacy products have been in the market for a period of time, and we do have a general expectation that they're not high growth products even in the forecast. So, they did have a bit of a -- many of these products did have a bit of a resurgence during COVID. And I think this is just on the other side of that COVID resurgence. I think that a lot of companies, including us, saw in some of these kind of legacy products.
Saleel Awsare: Ryan, let me just add a little bit of more color, right? Saleel here. So, as I think about this, as Jeremy clearly pointed out, it's really broad market and, there might be still, more industrial kind of IoT areas, broad market. So, a few macro slowdowns as opposed to what was originally when they planned it maybe six, nine months ago. So, that's how I would think about it. So, it's nothing hugely material, it's just from that dimension.
Ryan Koontz: Okay. Helpful. And then any color you can share on the risk in terms of what areas of the business, are these duplicative functions, are these redeployment of resources? Kind of walk us through what sort of adjustments you made on the OpEx side that'd be helpful.
Jeremy Whitaker: Yeah, some of it was duplicative. We did an acquisition of Uplogix nearly a year ago and then prior to that, a transition networks. And so, some of these were positions that as we've been able to get systems integrated and offices together, we've been able to identify some additional cost synergies to take out of the business. So, I think it's just a bit more of where we're at in the wrapping up the integration phase and identifying areas that we had duplicity.
Ryan Koontz: And is that in terms of the different cost components of R&D, SG&A, and Ops folks that flow into COGS, is it pretty broad-based or more focused?
Jeremy Whitaker: I would say it was pretty broad-based. We had done something in sales a couple quarters ago and so, this was probably more Ops, R&D, a little bit of marketing, and G&A.
Ryan Koontz: That's all I have. Thank you.
Operator: The next question comes from Christian Schwab of Craig-Hallum Capital Group. Please go ahead.
Christian Schwab: Hey, guys. I just want to, Jeremy, confirm something. So, the roughly $20 million miss at the midpoint from street expectations around $180 million to $160 million. So, half of that came from the distribution channel, excess inventory levels, and the other $10 million came from the large customer push-out. Is that correct?
Jeremy Whitaker: Yeah. I would say it's probably a little more heavily weighted to the distribution channel, long tail, kind of broad-based business.
Christian Schwab: Okay. So, it's not 50-50. It's maybe two-thirds, one-third?
Jeremy Whitaker: That's probably in the ballpark.
Christian Schwab: Okay. And then, shipping to Gridspertise, how much revenue do you expect to ship to Gridspertise in fiscal '24, roughly?
Jeremy Whitaker: Yeah. So, yeah, it's nearly $40 million, right around, maybe slightly a tad below that and we're on track to deliver that this fiscal year and it was a significant contributor to the current quarter, as we'd expected.
Christian Schwab: Yeah. Okay. So, Gridspertise is going as planned, and then we're kind of seeing some of the disruptions in the business that, well, many of your peers are seeing. So, right. So, as we look beyond the fiscal year, range of assumptions of big pipeline, large deals, inventory correction being over, have we figured out, what we think the sustainable top-line growth rate of the portfolio is? Are we running a 10% company? Are we running a 15% company, a 20% company? What should we be thinking about over a ballpark year timeframe?
Saleel Awsare: Yeah. This is Saleel here, Christian. I'm still going through all the numbers as I look at it. I think this is a growing company for sure. It's not a 25% grower. Let me be clear about that, because that's substantially different. I think this is high single digits, low double digit kind of grower. And be clear, some of these compute platforms that we're working on could do better than we anticipate. Just like Jeremy said, one of them got pushed out, but these are, I would think about as a high-protein kind of businesses. So, if one hits, it's a big number, but right now, I'm not ready to get into fiscal '25 and moving forward, we're going to kind of give you guys, more near-term kind of guidance as I think about it, but I see this as a growing company for sure, because we've got some of the right stuff with these compute and connect platforms that we have internally.
Christian Schwab: Yeah. So, on a go-forward basis, we should be, expect you guys to act like the disproportionate large share of public companies. We're going to go one quarter at a time, and then we'll speak esoterically about the future, but we're not going to start the year and give you guidance like this again. That's probably something we shouldn't be anticipating as we exit this fiscal year. Did I hear you correctly?
Saleel Awsare: Yeah, that's where my head's at right now. I came from -- I'll be very transparent with you. I came from a place where we did that. That's where my head's at. But, I'm open to adapting, which I've done in the past. So, we'll think about it. But that's where my head's at right now.
Christian Schwab: Okay. Perfect. No other questions. Thanks, guys.
Saleel Awsare: Thank you. Thank you for your question.
Operator: This concludes our question-and-answer session. The conference has now also concluded. Thank you for attending today's presentation and you may now disconnect.
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