Apple Inc.

Good afternoon everyone. We are extremely pleased to report the record results for our September quarter which capped a tremendously successful fiscal 2018. a year in which we saw double-digit revenue growth in every geographic segment and established new revenue and earnings records in every single quarter. Revenue in the fourth quarter was 62.9 billion, up 20% and more than 10 billion over last year, with strong double-digit growth in each of our geographic segments and record Q4 revenue in the Americas, in Europe, Japan, and rest of Asia Pacific. In fact, we set new revenue records in almost every market we track with especially strong growth in Germany, Italy, Sweden, Switzerland, Japan and Korea, all major markets where revenue growth was 25% or higher. We also set new fourth quarter revenue records for iPhone and wearables and new all-time records for services and Mac. Gross margin was 38.3%, flat sequentially in line with our expectations, as leveraged from higher revenue offset seasonal transition costs. We set new September quarter records for net income, EPS, and cash flow from operations. Net income was $14.1 billion, up 3.4 billion, or 32%, over last year. Diluted earnings per share were $2.91, up 41%. Cash flow from operations was $19.5 billion, up $3.8 billion from a year ago. iPhone revenue grew 29%, with growth of more than 20% in every geographic segment. iPhone ASP was $793, compared to $618 a year ago, driven by strong performance of iPhone X, 8 and 8 Plus, as well as the successful launch of iPhone XS and XS Max in the September quarter this year, while we launched iPhone X in the December quarter last year. We sold 46.9 million iPhones during the quarter. We grow to 20% or more in several markets, including Japan, Australia, New Zealand, Sweden, Norway, Chile, and Vietnam. Customer satisfaction with iPhone continues to be outstanding and is the highest in the industry. The latest survey of U.S. consumers from 451 Research indicates customer satisfaction of 98% for iPhone X, 8 and 8 Plus combined. And among business buyers who plan to purchase smartphones in the December quarter, 80% plan to purchase iPhones. Turning to services, it was our best quarter ever in total and virtually in every market around the world with revenue of $10 billion. A year ago, we had a one-time $640 million favorable impact to services revenue due to an accounting adjustment and taking that into account, our services growth in Q4 this year was 27%. As Tim mentioned, we reached new all-time quarterly revenue records for many services categories and we are well on our way to achieve our goal to double our fiscal 2016 services revenue by 2020. We now have over 330 million paid subscriptions on our platform, an increase of over 50% versus a year ago. We are very pleased not only with the growth but also with the breadth of our subscription business. In fact, 30,000 third-party subscription apps are available on the App Store today and the largest of them all represents less than 0.3% of our total services revenue. Next, I'd like to talk about the Mac. We saw great response to our new MacBook Pro models that we launched in July, with strong double-digit revenue growth, driving an all-time quarterly record for Mac revenue. We were especially pleased with Mac momentum in emerging markets, with strong growth in Latin America, in India, the Middle East and Africa, and Central and Eastern Europe. At over 100 million units, our active install base of Macs is at an all-time high, and the majority of customers purchasing Macs in the September quarter were new to Mac. We sold 9.7 million iPads during the quarter, gaining share in nearly every market we track, based on the latest estimates from IDC. We generated iPad growth in a number of key regions around the world, including Latin America, Europe, Japan, India, and South Asia. Among customers around the world purchasing iPads during the quarter, nearly half were new to iPad, and our active install base of iPad reached a new all-time high. NPD indicates that iPad had 58% share of the US tablet market in the September quarter, up from 54% share a year ago. And the most recent consumer survey from 451 Research measured iPad customer satisfaction ratings of 96% for both iPad and iPad Pro. And among business customers who plan to purchase tablets in the December quarter, 74% plan to purchase iPads. Other products revenue grew 31% to a new September quarter record with an increase of over $1 billion compared to a year ago. Thanks to wearables growth of over 50% and the strong performance of Apple TV in addition to the introduction of HomePod earlier this year. As we look back across fiscal 2018, we have made great progress in the enterprise market where iOS is transforming how business gets done across multiple industries. In fact, over 450 airlines and 47 of the top 50 around the world have adopted iOS to help pilots fly safer, more efficient flights. And many airlines are also using iOS to support better customer experiences and improve maintenance operations. We're also making great strides in the retail sector, where 9 of the top 10 global retailers use iOS devices to transform their customer and employee experiences. We are seeing industry-wide adoption of iOS at thousands of retailers, from neighborhood boutiques to many of the best-known retailers in the world. Deployment of iOS devices is growing steadily as retailers replace their traditional point-of-sale systems and use custom iOS apps on iPhones and iPads to provide highly personalized shopping experiences. Our success in enterprise is supported by our key partnerships. Since launching our first strategic partnership with IBM, 240 large customers have signed Mobile First for iOS deals. Additionally, earlier in the year, we introduced two new technology offerings, IBM Watson Services for Core ML and the IBM Cloud Developer Console for Apple, that are enabling businesses to combine machine learning and cloud for a new generation of dynamic smart apps made for iOS. Over 60 new signings across numerous industries have been added since launching these new tools. In our new partnership with Salesforce, we're excited to bring together the number one customer relationship management platform and iOS. Together with Apple, Salesforce is redesigning its apps to embrace the native mobile platform with exclusive new features on iOS. The companies will also provide tools and resources for millions of Salesforce developers to build their own native apps with a new Salesforce mobile SDK for iOS. And finally, we recently announced Apple Business Manager, a new way for IT teams to deploy Apple devices at scale. The response from companies around the world has been tremendous, with over 40,000 companies currently enrolled. Let me now turn to our cash position. We ended the quarter with $237.1 billion in cash plus marketable securities. We also had $102.5 billion in term debt and $12 billion in commercial paper outstanding for a net cash position of $122.6 billion. As explained earlier this year, it is our plan to reach a net cash neutral position over time. As part of this plan, we returned over $23 billion to investors during the quarter. We purchased 92.5 million Apple shares for $19.4 billion through open market transactions, and we paid $3.5 billion in dividends and equivalents. For our fiscal year 2018, revenue grew over $36 billion to $265.6 billion, an all-time record. Every geographic segment grew double digits, with new records in the Americas, Europe, Japan, and the rest of Asia-Pacific. We also set new all-time records for net income of 23% versus last year and EPS of 29%. And we returned a total of almost $90 billion to our investors during the year, including almost $14 billion in dividends and equivalents and over $73 billion in share repurchases. Before we discuss our December quarter outlook, I'd like to describe a number of changes in our financial reporting that we're implementing as we enter our new fiscal year. First, given the increased importance of our services business and in order to provide additional transparency to our financial results, we will start reporting revenue as well as cost of sales for both total products and total services beginning this December quarter. Second, also beginning this December quarter, we're adopting the FASB's new standard for revenue recognition. This will not result in any change to our total revenue, but it will impact the way we report the classification of revenue between products and services. In particular, the revenue corresponding to the amortization of the deferred value of bundled services such as Maps, Siri, and free iCloud services was previously reported in product revenue. After adopting the new standard, this revenue will now be reported in services revenue. The change in classification between products and services will also apply to the costs that are associated with the delivery of such bundled services. After we file our 10-K, we will post a schedule to our investor relations website showing the reclassification of fiscal 2018 revenue from products to services in connection with the adoption of the new standard. The size of this reclassification amounts to less than 1% of total company revenue. For clarity, this reclassification was not contemplated in our previously stated goal of doubling our fiscal 2016 services revenue by 2020. That goal remains unchanged and excludes the revenue that is now shifting from products to services over that timeframe. Starting with the December quarter, we will no longer be providing unit sales data for iPhone, iPad and Mac. As we have stated many times, our objective is to make great products and services that enrich people's lives and to provide an unparalleled customer experience so that our users are highly satisfied, loyal and engaged. As we accomplish these objectives, strong financial results follow. As demonstrated by our financial performance in recent years, The number of units sold in any 90-day period is not necessarily representative of the underlying strength of our business. Furthermore, a unit of sale is less relevant for us today than it was in the past, given the breadth of our portfolio and the wider sales price dispersion within any given product line. Fourth, starting with the December quarter, we will be renaming the other products category to wearables, home and accessories to provide a more accurate description of the items that are included in this product category. As we move ahead into the December quarter, I'd like to review our outlook, which includes the types of forward-looking information that Nancy referred to at the beginning of the call. We have the strongest lineup ever as we enter the holiday season and we expect revenue to be between $89 billion and $93 billion, a new all-time record. This range reflects a number of factors to be considered. First, we consider the effect on Q4 and Q1 of the launch timing of a new iPhone this year versus last year. Second, we expect almost $2 billion of foreign exchange headwinds. Third, we have an unprecedented number of products ramping, and while our ramps are going fairly well, we have uncertainty around supply and demand balance. We also face some macroeconomic uncertainty, particularly in emerging markets. We expect gross margin to be between 38% and 38.5%. We expect OPEX to be between $8.7 and $8.8 billion. We expect OIME to be about $300 million. And we expect the tax rate to be about 16.5% before discrete items. Also, today our board of directors has declared a cash dividend of 73 cents per share of common stock, payable on November 15, 2018, to shareholders of record as of November 12, 2018. With that, I'd like to open the call to questions.

Thank you, Luca. And we'd like to ask that you limit yourself to two questions. Operator, may we have the first question, please?

Certainly. Our first question will come from Wamsi Mohan with Bank of America Merrill Lynch.

Yes, thank you. Tim, there has been some real deceleration in some of these emerging markets, partly driven by some concerns around some of the rules the administration is contemplating and partly driven by things that are more specific to China, for instance, like some of the regulations around gaming. So can you talk about how you see the trajectory there for the business and what you think of the initiatives of some companies like Netflix and Fortnite trying to bypass the App Store around subscriptions, and I will follow up.

Sure, great question. Starting with emerging markets, the emerging markets that we're seeing pressure in are markets like Turkey, India, Brazil, These are markets where currencies have weakened over the recent period. In some cases that resulted in us raising prices and those markets are not growing the way we would like to see. To give you a perspective of some detail, our business in India in Q4 was flat. Obviously, we would like to see that be a huge growth. Brazil was down somewhat compared to the previous year. And so I think, or at least the way that I see these, is each one of the emerging markets has a bit of a different story and I don't see it as some sort of issue that is common between those for the most part. In relation to China specifically, I would not put China in that category. Our business in China was very strong last quarter. We grew 16%, which we're very happy with. iPhone in particular was very strong, very strong double-digit growth there. Our other products category was also stronger, in fact, a bit stronger than even the overall company number. The App Store in China. We have seen a slowdown or a moratorium, to be more accurate, on new game approvals. There is a new regulatory setup in China and things are not moving the way they were moving previously. We did see a few games approved recently. But it's very far below the historic case and as you've probably seen some of the larger companies there that are public have talked about this as they've announced their earnings as well. We don't know exactly when this will happen. the approvals will sort of return to a normal pace. So I would not want to predict that. I do not view, just for avoidance of doubt here, I don't view that that issue has anything to do with the trade-related discussions between the countries. I think that is strictly a domestic issue. domestic issue in China. In terms of larger developers, if you sort of step back and look at the value proposition for people from the app store, there are two key constituencies in that equation. There's the user and there's the developer. If you start with a user, what the App Store provides people is sort of the best and safest place for users to get apps. And we have a tremendous process and infrastructure around achieving that. And where it is not perfect, we wind up reviewing over 100,000 apps per week between new apps and updates for existing apps, and then work with developers quickly to fix the issues. And we also provide the user a one-payment model for purchasing apps and subscriptions and in-app purchases, et cetera, so that they are not in a position that they have to share their private information across many companies. And so that's sort of the proposition for the user. For the developer, we obviously provide the developers a tremendous amount of developer tools, programs, compilers, languages, of course the operating system, APIs, SDKs, and have a huge developer relations team. And we do a tremendous amount of marketing for developers, including the to new today editorial that we just started in the past few months. Personal recommendations, search tools and so on and so forth. And so if there will be, there's no doubt in my mind there have already been some large developers that concluded that they could do something on their own. We're fine with that. I think Luca mentioned in his comment that the largest, if I look at the largest developer, they make up less than 0.3% of the services revenue. So it's probably good to think about that in that context. And there are millions of apps on the store, obviously, and 30,000 or so subscription apps. And so the subscription business itself is nearly as broad as the app store itself is. So that's the value proposition. I think that the vast majority of people are very happy with it, including the most important people at all, which is the user.

Thank you, Tim. I appreciate the response. If I could just ask you really quick on Apple's role in healthcare. It's been growing significantly since the early introduction in the watch and then, you know, the various kits for developers including healthcare kit, etc. And when you combine that with your very staunch advocacy for privacy, I see Apple could become a really large disintermediating force in all the friction in the healthcare industry today in the way medical information is shared and distributed. Is this the way that you see the future for Apple in healthcare and do you see a means to also grow your services business through the healthcare offerings that could become subscriptions to your customers?

Thank you. Apple has a huge opportunity in health. And you can see from our past several years that we have an intense interest in the space and are adding products and services, non-monetized services so far to that. And I don't want to talk about the future because I don't want to give away what we're doing. But this is an area of major interest to us. Thank you.

Thank you, Wamsi. Could we have the next question, please?

Shannon Cross from Cross Research has the next question.

Thank you very much for taking the question. Given the $4 billion range in revenue that you're giving for the quarter and all of the you know, all the things that are going on in the world right now. Can you maybe give a little detail about the variables that you took into account when you were, you know, coming up with this, you know, geopolitical trade macro component costs? I don't know if you can just give us some ideas of what the puts and takes were. Thank you.

Yes, Shannon, I'll take this one. And at the revenue level, we started from the fact that we are – very, very excited about the lineup of products and services that we have getting into the holiday season. It's the strongest lineup that we've ever had. And our guidance range, by the way, represents a new all-time quarterly revenue record. As I explained in my prepared remarks, there are a number of things that need to be considered as part of this guidance range. The first one is The fact that the launch timing of the new iPhones this year is essentially in reverse order versus last year. And that has had an effect on Q4 and will have an effect on Q1. Last year, we launched the top end of our iPhone lineup, which was iPhone X during Q1, and placed the entirety of the channel field for iPhone X in Q1. This year we launched the top end of the lineup, which is the 10S and the 10S Max during Q4. Obviously this resulted in a more pronounced ASP growth in Q4 of 2018 and obviously a tougher compare for Q1. So I think it's important to keep that in mind as you look at the revenue guidance that we provided. The second point that needs to be kept in mind, it is a fact of life and we dealt with it for a number of years now, is the fact that when I look at currencies around the world, virtually every foreign currency has depreciated against the US dollar in the last 12 months. And when we look at the impact of foreign exchange on our revenue for the December quarter, we're looking at 200 basis points of headwinds, which translates, given the size of our business, to almost $2 billion of headwinds to our revenue. The third point that I think it's important to keep in mind and Tim has talked about this, we are launching in the last six weeks we've launched an unprecedented number of new products. They're all ramping right now. The ramps are going fairly well but obviously we have some uncertainty around supply demand balance for some of these products. And then, finally, the last point that we've taken into account is what Tim's talked about in terms of some level of uncertainty at the macroeconomic level in some emerging markets where clearly consumer confidence is not as high as it was 12 months ago. So take that into account, and that's how we got to the range.

Okay, thank you. And then I just want to talk a little bit about the pullback in terms of guidance from a unit perspective. I understand you don't want to give guidance because 90 days is a short period of time and it, you know, can be, you know, fluctuate. But what kind of qualitative commentary do you think you'll be able to provide? Because, you know, it's obviously investors have spent the last however many years going, you know, P times Q. So, you know, how should we think about what we can expect and sort of how – How are you going to manage this process as we go through? I know it's all our job to forecast.

Let me walk you through the rationale that we've used, and then I'll talk about this qualitative commentary that you were mentioning. As I said, our objective is to make great products, provide the best customer experience, and get our customers satisfied, engaged, and loyal to our ecosystem. When you look at our financial performance in recent years, take the last three years for example, the number of units sold during any quarter has not been necessarily representative of the underlying strength of our business. If you look at our revenue during the last three years, if you look at our net income during the last three years, if you look at our stock price during the last three years, there's no correlation to the units sold in any given period. As you know very well, in addition, our product ranges for all the major product categories have become wider over time and therefore a unit of sale is less relevant for us at this point compared to the past because we got this much wider sales price dispersion so unit of sale per se becomes less relevant. As I know, if you're aware, by the way, our top competitors in smartphones, in tablets, in computers do not provide quarterly unit sales information either. But, of course, we understand that this is something of interest, and when we believe that providing qualitative commentary on unit sales offers additional relevant information to investors, we will do so.

Let me make one additional point there just for clarity is that, Shannon, our intention is to continue to give revenue guidance at the company level and gross margin guidance in the other categories that we've been providing. And so our guidance isn't changing. It's the actual report that changes.

Thank you, Shannon. Could we have the next question, please?

Our next question comes from Mike Olson with Piper Jeffery.

Thanks very much, and good afternoon. With the staggered iPhone launch, were you able to discern any impact on the XS and XS Max from buyers potentially waiting for the XR? And what, if anything, can we take away from the December quarter guidance related to what you're seeing for early demand of the XR? And then I have a follow-up. Thanks.

Mike, it's Tim. The 10S and 10S Max got off to a really great start. We've only been selling for a few weeks. The 10R, we've only had out there for, I guess, five days or so at this point. And so we have very, very little data there. Usually there is some amount of wait until another product shows up and looks. But in looking at the data on the sales data for 10S and 10S Max, there's not obvious evidence of that in the data as I see it.

Got it. And you mentioned record levels for various components of the services business. As we look forward, if growth of services is to maintain something close to the recent pace, what are the components of services that you're particularly excited about? that could drive that and be the strongest drivers. And maybe an offshoot to that, it seems like the news flow around augmented reality slowed a little bit in recent months. Is that potentially a material contributor to services in the near future? Thanks.

Mike, as we said, during the September quarter, we set new records for many, many services categories, right, from Apple Music to cloud services, to the App Store, to Apple Care, and Apple Pays really has an exponential trajectory right now. When we look at our services business, we think about the fact that we have a very large and growing install base. The install base of all our major product categories is at an all-time high and has been growing over the last several quarters. So the opportunity for us to monetize our services business continues to grow over time. Of course, we are also improving the quality of the services that we provide. And if you look back during the last three years, we've added new services to our portfolio. We added Apple Pay. We added Apple Music. We added this advertising business on our App Store. Clearly, we will want to continue to offer new services over time. There are a number of vectors that allow us to continue to grow the business over time. We have stated that we want to double the size of the services business from the level that we had in fiscal 2016 by 2020. We are well on pace to achieve that. We feel very, very confident about the future and the opportunities that we have in the services space.

Mike, in terms of your question on AR, I have a different view than you do on this one. Just a year ago, practically a year ago, we came out with ARKit 1. Six months or so after that, we came out with 1.5. We then recently came out with ARKit 2. The number of things that you can do are growing significantly. The number of developers that either have done something or even more the case that are working on things that I've seen are growing tremendously. There's a lot of interest out there. And the number of categories that I'm seeing from gaming to shopping to – I was in China a few weeks ago and – I saw AR in an art sense, an art exhibit. I was in Berlin last week and saw it being used in a historical educational kind of sense. I'm seeing it sort of everywhere I go now. So I think we are in the early days. It'll keep getting better and better, but I'm really happy with where things are at the moment.

Thank you, Mike. Could we have the next question, please?

Next, we'll go to Katie Huberty with Morgan Stanley.

Thank you, Tim. Given the current trade negotiations and broader geopolitical risk, do you have any plans to consider diversifying the supply chain? And if you were to do that, either on your own or sort of forced, Do you think it would have significant impact on the business or profitability?

Katie, if you look at the products that we have created and are manufacturing, they're really manufactured everywhere. We have significant content from the U.S. market. We have content from Japan to Korea. to many countries and we have great content from China as well. And so there are many hands in the products. The vast majority or almost all of the R&D is in the United States as well as a lot of the support organizations. I think that that basic model where you look around the world and find the best in different areas, I don't expect that model to go out of style, so to speak. I think there's a reason why things have developed in that way and I think it's great for all and citizens of countries that are involved in that. And I'm still of the mindset that I feel very optimistic and positive that the discussions that are going will be fruitful. You know, these relationships, these trade relationships are big and complex. They clearly do need a level of focus and a level of updating and modernization. And so I'm optimistic that the countries, the U.S. and China and the U.S. and Europe and so forth can work these things out and work for the benefit of everyone.

That's helpful, Culler. And Luca, as a follow-up, NAN prices fell significantly during the September quarter. Why aren't we seeing that flow through to margin expansion for the overall company?

You're referring to the guidance that we provided for Q1, I imagine. Yes. Let me give you the puts and takes, Katie. You're correct. We are going to be getting some benefits from commodities in general and memory in particular, memory. On a sequential basis, it's about 30 basis points favorable for us going into the December quarter, and obviously we're going to be benefiting from the leverage, which is typical of our seasonality in the December quarter. On the other hand, as I mentioned before, currencies have weakened against the U.S. dollar, and the impact that we expect at the gross margin level from foreign exchange is a 90 basis points headwind sequentially. And of course, at this point in the cycle, we also have higher cost structures because, as I said, we've launched so many new products in the last six weeks. So those are the puts and takes, leverage and commodity savings on one side and FX and the new products on the other side.

Thank you, Katie. Will we have the next question, please?

Next we'll go to Jim Suva with Citigroup.

Thank you very much. A question for Tim and a question for Luca, and I'll ask them at the same time so you can decide who wants to go first or second. But operationally, Tim, you know, I think your company is at a disadvantage relative to others in India, giving, you know, where items are produced versus shipped versus taxed versus installed as well as ability to own stores. So can you help us, you know, address that? Is India going to potentially be a big area? I think you got about only 1% market share, but it sounded like things maybe softened there. And then for Luca, you know, there'll probably be a lot of pushback about not giving iPhone unit data. It sounds like you're still going to give revenue data, if I heard that correctly. But, you know, some people may fear that this now means that the iPhone units are going to start going negative year over year. because it's easy to talk about great things and not show the details of things that aren't so great. So thank you very much, gentlemen.

Okay, I'll start with India. We've had really great productive discussions with the Indian government, and I fully expect that at some point, They will agree to allow us to bring our stores into the country. We've been in discussions with them and the discussions are going quite well. There is, as you point out, there are import duties. Most of the product categories that we're in, in some cases they compound and this is an area that we're giving lots of feedback on. We do manufacture some of the entry iPhones in India and that project has gone well. I am a big believer in India. I am very bullish on the country and the people and our ability to do well there. The currency weakness has been part of our challenge there, as you can tell from just looking at the currency trend. But I sort of view these as speed bumps along a very long journey, though, and the long-term I think is very, very strong there. There's a huge number of people that will move into the middle class. The government has really focused on reform in a major way and made some very bold moves. And I applaud them for doing that and sort of can't wait for the future there.

And Jim, let me take the question on units. First of all, as Tim said, our approach to guidance, providing guidance, doesn't change at all. We continue to provide the same metrics that we were providing before. In terms of reporting results, one of the things that we are doing, and it's new and it's an addition to the information that we provide to investors because we've heard some significant level of interest around this, Starting with the December quarter, for the first time, we're going to be providing information on revenue and cost of sales and therefore gross margins for both products and services. And this will be the first time that we're going to provide gross margin information for our services business, which we believe it is an important metric for our investors to follow. I've given the rationale on why we do not believe that providing unit sales is particularly relevant for our company at this point. I can reassure you that it is our objective to grow unit sales for every product category that we have. But, as I said earlier, a unit of sales is less relevant today than it was in the past. To give you an example, the unit sales of iPhone at the top end of the line have been very strong during the the September quarter. And that's very important because we're attracting customers to the most recent technologies and features and innovation that we bring into the lineup. But you don't necessarily see that in the number that is reported. And so therefore, we will, as I said, we will provide the qualitative commentary when it is important and relevant. But at the end of the day, we make our decisions to, you know, from a financial standpoint, to try and optimize our revenue and our gross margin dollars. And that, we think, is, you know, the focus that is in the best interest of our investors.

Jim, let me just add a couple things to that for color. Our installed phase is growing at double digits. And so there's no – and that's probably a much more significant metric for us from an ecosystem point of view and the customer loyalty, et cetera. The second thing is this is a little bit like if you go to the market and you push your cart up to the cashier and she says or he says, how many units you have in there? It doesn't matter a lot how many units there are in there in terms of the overall value of what's in the card.

Thank you, Jim. A replay of today's call will be available for two weeks on Apple Podcasts as a webcast on apple.com slash investor and via telephone. And the numbers for the telephone replay are 888-203-1112. or 719-457-0820 and please enter confirmation code 3699080. These replays will be available by approximately 5 p.m. Pacific time today. Members of the press with additional questions can contact Kristin Hugett at 408-974-2414 and financial analysts can contact Matt Blake or me with additional questions. Matt is at 408-974-7406, and I'm at 408-974-5420. Thanks again for joining us.

That does conclude our conference for today. Thank you for your participation.