Good day, and welcome to the FedEx Fiscal Year 2025 Second Quarter Earnings Call. All participants are in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ms. Jeni Hollander, Vice President of Investor Relations. Please go ahead.

Good afternoon, and welcome to FedEx Corporation's second quarter earnings conference call. The second quarter earnings release, freight assessment results release, Form 10-Q and stat books are on our website at investors.fedex.com. This call and the accompanying slides are being streamed from our website. During our Q&A session, callers will be limited to one question to allow us to accommodate all those who would like to participate. Certain statements in this conference call may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our press releases and filings with the SEC. Today's presentation also includes certain non-GAAP financial measures. Please refer to the Investor Relations portion of our website at fedex.com for a reconciliation of the non-GAAP financial measures discussed on this call to the most directly comparable GAAP measures. Joining us on the call today are Raj Subramaniam, President and CEO; Brie Carere, Executive Vice President and Chief Customer Officer; and John Dietrich, Executive Vice President and CFO. Now, I will turn the call over to Raj.

Thanks, Jeni. We are in the home stretch of peak, and I want to begin by thanking our team members for their hard work and dedication as we deliver an outstanding holiday season for our customers. Today marks an important step in our transformation. Following our assessment of FedEx Freight, which we announced and commenced back in June, we have decided to pursue a full separation of this business, which will result in two industry-leading public companies. Through the separation, we believe we will unlock significant value for stockholders, while allowing for continued commercial, operational and technological cooperation between both businesses. The separation will also enable both companies to benefit from enhanced focus and competitiveness. For FedEx, this will ensure strong execution of our near and longer-term strategic priorities, while preserving the benefits Freight and FedEx enjoy from their longstanding connectivity. Each independent company will be well-capitalized with flexibility to invest in profitable growth, while continuing to return capital to shareholders. I would like to provide a brief overview on the compelling value proposition of both businesses starting with FedEx Freight. We're excited to create a leading LTL pure-play, the largest carrier by revenue with the broadest network and the fastest transit times. FedEx Freight has deep relationships with customers who turn to us for our reliability, simplicity and choice of services. Freight has maintained its leading market share position for a long time and increased operating profit nearly 25% on average per year over the last five years, expanding operating margin by approximately 1,100 basis points. The team's focus on safety, facility utilization, revenue quality and operational efficiency has driven this performance and these factors will continue to guide Freight's go-forward strategy supported by a strong balance sheet. As a separate company, Freight will be better positioned to unlock…

Thank you, Raj. Market conditions remain soft, but our solid service levels, unique value proposition and innovative offerings supported our Q2 performance and have positioned us well for a successful peak season. Consolidated revenue declined 1% in the quarter, driven by the weak industrial economy. U.S. manufacturing PMI has indicated a contraction for 24 out of the past 25 months, representing the second longest downturn in U.S. history. Reviewing each segment on a year-over-year basis now. At Federal Express, revenue was essentially flat. Higher yields across our services were partially offset by volumes, which declined year-over-year. We again saw increased demand for our lower yielding services. Some of this demand increase was driven by a shift in customer preferences, particularly with the shift from home delivery to ground economy. But the majority was due to organic demand and not related to trade down between services. At FedEx Freight, lower volumes, fuel surcharges, and weight per shipment drove the top-line decline. Year-over-year comparisons were challenging as some customers won last year from the yellow bankruptcy have since left in search of lower prices. That being said, we are ready to capture additional profitable volume when the market returns. Turning now to volume trends by service during the quarter. Volumes were pressured, led by weakness in the U.S. domestic market, partially offset by strong international growth. Across U.S. domestic express services, volumes declined 1%, primarily due to weakness in the industrial economy. Ground volumes were down 1% as well, with the soft B2B environment weighing on ground commercial growth. While we recognize that e-commerce will continue to outpace B2B growth in the years ahead, we know that the priority customer base is stable with low rates of churn. And the current priority volume weakness reflects the state of the broader global macroeconomic…

Thank you, Brie. Despite soft market conditions, our Q2 performance demonstrates the team's strong commercial execution and actions to lower our costs to serve. We sequentially grew adjusted operating profit by approximately $170 million and increased our adjusted earnings per share year-over-year with the growth driven primarily by our Federal Express segment. And we achieved these results despite revenue declining 1%. Walking through the dynamics of the quarter, the soft global industrial economy coupled with the competitive pricing environment constrained our results. The Postal Service contract expiration negatively affected two months of the quarter, resulting in additional operating profit headwind. However, our plans to remove costs associated with this contract expiration are on track. DRIVE Benefits of $540 million offset these headwinds and supported our consolidated year-over-year adjusted earnings growth. Providing more detail by segment, at Federal Express, we grew adjusted operating income by $146 million year over year as a result of DRIVE savings, base yield improvement, and increased international export demand. We achieved this result despite inflationary pressures and several significant headwinds, including the Postal Service contract expiration, a $90 million headwind from the Cyber Week timing shift and a $20 million headwind from the hurricane in the Southeast U.S. As Raj and Brie mentioned, we're pleased that in Europe, our continued network optimization initiatives and strong execution contributed to the profit improvement at Federal Express. And the ramping of our Tricolor strategy drove higher average daily pounds and yields year-over-year for Federal Express International Freight. In Q2, we decreased total U.S. Domestic flight hours 24%, largely due to the 60% reduction in daytime flight hours that Raj mentioned due to the expiration of the postal service contract. At FedEx Freight, while operating profit was down $179 million approximately $30 million of this decline was due to our…

[Operator Instructions]. And the first question will come from Chris Wetherbee with Wells Fargo.

Maybe I could just hit on the guidance for a moment. So I think the second quarter results were generally in line with at least what you guys talked about on the last call. So as we think about the dollar cut coming from the back half of the year, I know, John, you talked about sort of the industrial production outlook and maybe how that's a bit more tempered I guess I also wanted to kind of think about LTL or the freight business within that context. It was obviously under some pressure here. I guess maybe if you could help break down the moving pieces of the dollar in a little bit more detail and then also talk about the cadence of how that plays out? Is it a little bit more 3Q weighted? Or is it a little bit more 4Q weighted? Do you think things get better by the time we get to the end of the fiscal year? Just kind of curious how to think about that.

So thanks, Chris. I appreciate the question. So as you know, our prior guidance factored in DRIVE savings as well as the pricing actions that we implemented. However, the expected volumes and related revenue just didn't materialize. Our updated adjusted EPS range, which is in the $19 to $20 reflects our revised revenue expectations. And from a timing standpoint, and while we're not giving quarterly guidance, I can tell you that Q3 will benefit from ramping DRIVE savings, improved top line flow-through due to the timing of Cyber Week that we talked about and continued revenue quality actions. And as Brie talked about, we're seeing encouraging signs from our peak demand. It's important to remember for Q3, though, that the USPS headwind is expected to increase in Q3 and then somewhat less than in Q4. But that headwind will more than offset the benefit of the Cyber Week I just mentioned. We continue to anticipate DRIVE savings to build incrementally in Q3 and Q4. And from a Q4 standpoint, that is traditionally our strongest earnings quarter of the year, and we expect this dynamic to hold. So -- and that's true despite even having one fewer operating day. So hopefully, that gives you some more perspective.

Your next question will come from Ken Hoexter with Bank of America.

Great, and congrats on the freight spend, obviously, long anticipated and a great move to see in value creation. But my question is for Brie. You talked a little bit about peak season here and how it's shifting into third quarter. Maybe can you give a little bit more color on kind of -- you mentioned the peak was strong. Is there anything we can read into that in terms of volumes ability to get price to flow through? I guess I'm more focused on the volumes, both at Ground and Express?

Great question. So from a December perspective, we are pleased. I will say it picked up, right, after Cyber Monday, it was a very strong week, and we are from a December perspective, pleased volumes are running ahead of forecast. And as I mentioned, our peak surcharge capture from an absolute dollar amount will be up year-over-year. So we do think that December is going to be a very strong month. That being said, I do want to talk about our top line outlook for the back half of the year because we do not necessarily believe that the December performance is going to carry through in the back half. So as we're thinking about the back half top line outlook, we're looking at some improvement. I think you're going to see that improvement come in the form of domestic volumes, in particular, a ground. We think that, that will improve in the back half. We do anticipate that Q2 was the trough. For FedEx Freight from a revenue perspective and then from an international, actually, what we think we'll see in the back half is that total volume will look a lot like the first half with actually some slight softening in Asia. So we're very pleased with December. The execution is going to be great. The capture is going to be great, but we're not yet thinking that this is a signal of more to come in the back half.

Next question will come from Ari Rosa with Citigroup.

Congratulations on the strategic move here. Raj, I'm just curious to hear you talk a little bit about kind of how you see the separation playing out? Just if you could talk about what are the things that kind of need to be done to ensure a smooth transition? And then also, what are your thoughts on kind of the risk of customer attrition as you separate out the two businesses and just kind of ensuring that customers aren't confused by the separation or maybe see it as a risk to their operations, you guys separating out the two businesses.

Yes. Thank you, Ari. I think we are -- we decided to separate because of the potential to increase shareholder value for both FedEx and FedEx Freight. As far as we have put in place the separation management office with Claude Russ as the head to make sure that we are on get from here to day 1. To the points that you made, as Brie talked about, we have appointed a VP of LTL sales, and we are going to add 300 sales folks, but in the next year, to make sure that we pay more directly deal with the issue that you talked about. We are also going to continue to improve our customer experience. It's very important for you to note also that the FedEx Freight Company benefits a lot from the association with FedEx. And that association, whether it's commercial, whether it's operational or other's technological, we will have those arrangements in place as we proceed through the separation. So I think we'll be able to handle this transition quite well.

Your next question will come from Jordan Alliger with Goldman Sachs.

Just curious if you could give a little more color around the Network 2.0 rollout, the progression that's planned from here and given the experience with Canada or any other areas? What do you think has gone particularly well? And what has been the more challenging aspect of it all?

Yes, thank you very much, Jordan. I think, yes, we may continue to make significant progress on Network 2.0. We've taken a deliberate approach to roll out and prioritizing service policy. We have optimized 200 stations so far and including 130 in Canada. And we will complete the rest of the Canada integration early in 2025 with the last major market being Montreal. As a feature of how we roll this out every overtime, we roll out something, we take lessons to learn and when we keep applying into the next one. And that's working quite well. We are continuing to see 10% P&D cost reduction where we have fully rolled out 2.0. So at the end of FY '25, we expect to have approximately 250 stations integrated. So hopefully, that answers your question, Jordan.

Your next question will come from Daniel Imbro with Stephens Inc.

John, maybe one on capital allocation and the balance sheet. So first, I guess, how do you envision maybe debt being divvied up? Or how should we think about target leverage for each business? And then, John, you've worked hard to reduce the capital intensity of both businesses, I guess how do you envision capital allocation changing at all? Will this spin enable certain investments you previously weren't making? Or how did that change?

Sure. Thanks, Daniel. Yes. No, we're not anticipating any changes in capital allocation. We're continuing to be focused on optimizing our existing business, ensuring significant adjusted free cash flow is returned to stockholders. That's going to be true both before and after the separation. We continue to have the programs in place. We're going to -- we've already accomplished $1 billion of share repurchases in Q2 for a total of $2 billion for the full year, with remaining $500 million for the remainder of the year. So that's all going to remain in place. Now in terms of capital allocation in kind of the post-separation environment, that's all going to be something we're going to be reviewing over the coming months and look forward to keeping you updated on the progress of that.

The next question will come from Jason Seidl with TD Cowen.

Thank you, operator. Everyone, evening. Congrats on the spin. It's always nice to see some value creation out there. I wanted to focus a little bit on the commercial agreements you spoke about. You mentioned the ones that were with peak help and drayage. How long are these agreements for? And also, what about anything on the bundle side between the two companies? I'm assuming existing contracts that are offer be honored. And how should we look at the bundle going forward? I'm assuming they'll just go away.

That's a great question. So I think we just need to take a step back and just clarify what the customer base of FedEx Freight looks like today. So first and foremost, obviously, FedEx Freight would not be the powerhouse that it is today without the incredible strategy to take these three networks together, put them together, put the FedEx brand on them, and then to build off just the incredible relationships that FedEx has with customers. That is one of our commercial strength is deep solutioning and partnerships with our customer, and that has really created a lot of momentum. That being said, if you look at the majority of the FedEx Freight revenue base today, while the majority of small customers are bundled, the majority of the actual volume at FedEx Freight is negotiated on an independent contract today. We really made a pivot, I guess, about 4 or 5 years ago recognizing that when we are competing in a fragmented market, we had to negotiate the freight business separately. So those contracts will be honored. As you know, the vast, vast majority of FedEx freight contracts are renegotiated every year. So of course, they will be honored as we go through this process. And that's why we are very confident in the incremental focus dedicated sales team. It's important to note, we have about 75 sales reps today that are dedicated to large accounts at freight. So this will be additive to them. As we go through the process, we will look at the small customer strategy, and I anticipate that, that will be slightly nuanced because that's where we really have leveraged the benefit of the earned discount program at FedEx. There is a common mess that FedEx Freight revenue is diluted because of that bundle, and that is not true. Actually, the way the earned discount program works is that as they ship more FedEx Freight or more LTL you actually get incremental benefit on your parcel side. So there is some potential benefit from small customer improvement, too. But we're very comfortable in our commercial strategy, and we can execute it.

I think what I would add to that from a kind of intra company standpoint, it's important to recognize that through separate operating companies previously and as Raj mentioned in his comments, freight has benefited from providing services to Euro Express. So a lot of agreements already exist that will just be enhanced as we go forward with the separation. So we're not going to have to reinvent the wheel on this.

The next question will come from Conor Cunningham with Melius Research.

Maybe going back to the first question just on EPS, the change in the guidance. So Freight was clearly pressured in the quarter. Is the entirety of the change in the guidance associated with the freight business? It just seems like the underlying core trends in Express are actually improving. I don't know if you could just talk a little bit about the dynamic between the two businesses and the changes overall.

Sure. Thank you, Connor. So look, there's a number of considerations. The pricing actions that we've implemented are supporting our FY '25 earnings growth assumptions for sure. However, revenue expectations remain constrained due to the demand environment that largely resulting from the continued weakness in the U.S. industrial economy that Raj talked about. So U.S. premium services, even though there's some -- we talked a little bit about peak, but U.S. premium services are expected to remain muted for a while. Thereby putting pressure on op income and margin. We do expect continued growth from our deferred services, which are contributing, but with lower margin and lower flow-through to the bottom line. So really, the top end of our range assumes a modest improvement in global industrial production and slight revenue slight growth in revenue. The low end of the range assumes revenues declined slightly year-over-year driven incremental -- incrementally softer industrial production and pricing and the midpoint just assumes flattish revenue year-over-year. So we're going to be focused on controlling those things we can. We remain confident and DRIVE and those savings will continue to ramp incrementally during the second half. But those are some of the considerations that are going into our outlook.

Yes. And let me just add one other thing, Connor. I think at an overarching level, I mean, it's been really surprising for me to see the last the last 25 months that were declining ISM to '24. So it's very difficult to say when that will turn around and the fact that we have produced the results and especially in FEC in this environment, I think it says a lot about what we can do and also shows what can happen when that market turns. But we are assuming that the industrial production and the manufacturing continues to be similar to what we saw in the first half for the second half. And as was stated earlier, 60% of the revenue for the FECs coming from B2B, while 90% comes from LTL. So hopefully, that will help you with the calculations.

Next question will come from Brian Ossenbeck with JPMorgan.

So Brie, I just wanted to come back to you on the general trends for price and competition. You mentioned it's still pretty competitive out there. You don't see a trade down necessarily, but it does sound like the deferred side of the business is growing faster. So I just want to see if you can offer a little bit more comment. It sounds like the demand surcharge is sticking, but what about the other ones that you've put into place to help optimize the network and sort of get that revenue management moving in the direction that you would want? How are those sticking? And how would that progress from 2Q into the back half of the year?

Brian, great question. So the market certainly is competitive. I do feel that it's rational. From a pricing strategy, as we think about the yields in the back half, they are going to remain pressured. That is a function of two things: one, the economy; and two, to your point, there is a mix change. I do want to emphasize that we do have some customers trading down. We're also, as we go to acquire new volume and customers because all of our customers are simply trading less. In a downturn, you need new customers to be able to add to the portfolio. And so there is growth in new customers in the deferred portfolio. From a pricing strategy perspective, I think the team, despite the economy is executing really well. The pressure that we're seeing is on the base rate and then wait. We know every time we're in a downturn, ways are pressured really across all the portfolio, but especially in the freight portfolio. And so there's not a lot that the team can do from a weight perspective. What they can do is be really disciplined in getting the surcharges, especially those surcharges that drive a disproportionate amount of cost. So peak is a great example. They're executing on peak. From a large package perspective, nobody moves large packages better than we do. And actually, we're seeing that part of what we're seeing in December is a lot of flow through from a port's perspective. As you heard, not only are we being disciplined from a large package capture on surcharge, but the dimensional capabilities that we're putting in to get captured is increasing it. And then from a rural perspective, we have the best value proposition here in the United States into the rural markets, and that matters for a lot of our customers. The last 3% or 4% of their volume, they don't want to have to use a different provider, and so we're really being disciplined on getting those surcharges. They are contributing, but the base rate is really pressured because of the economy. I hope that helps.

Your next question will come from Brandon Oglenski with Barclays.

Hey, good evening and congratulations on the spend. I know a lot of your shareholders will definitely be happy here too. But I guess, Raj, can you expand on what you're doing differently under DRIVE? You spoke about how it's driving the way you do business today versus what you did yesterday and especially in the context of revenue quality, which I think Brie has mentioned many times and maybe even reflecting on losing your largest customer, but it looks like your margins have actually come up. So what else in the portfolio potentially can you change looking forward?

Okay. I'm trying to digest that question, Brandon, but let me just start with DRIVE firstly. I think DRIVE has clearly evolved to be how we work in this company. We have established an overarching market leading approach to overall governance that leads to disciplined execution. And we are -- it's a data driven approach and very rigorous and very timely decision making and ultimately leads to much, much better execution. So this is going to stand us in good stead as a foundation for FedEx to execute as we go forward. The second thing is we also adopted a data first digital mindset in solving problems while creating differentiation in our service offerings. The underlying technological innovation and transformation that we have created is quite profound. And those are the two things powering our execution and that's also why as we've changed our vision to making supply chains smarter for everyone, it starts by making our own supply chain smarter. Of the $4 billion of DRIVE savings, I think roughly $1.8 billion would be directly the result of the new technologies that we have put in place. So that's what DRIVE is all about and as we look at what comes next whether as we implement Network 2.0 or whether we improve and expand on Tricolor or expand our operations and expand our performance in Europe, all those are going to be guided through DRIVE and that's what gives us the confidence of execution. I hope that answers the question that you asked.

The next question will come from Bruce Chan with Stifel.

Hey, good evening everyone and echo the sentiments on the spin, great to see. Maybe somewhat of an oblique follow-up here to Brian's question. There's been some suggestion of a USPS privatization. Maybe we can get your thoughts on what that would mean for the competitive environment. Is that a new bona-fide competitor or is that maybe introducing a more material profit mandate, and thus making the Postal Service more rational? So any thoughts and color there would be great.

Well, it is very early for us to comment on something like that. We will keep that we will monitor the developments there very closely obviously. But one of the principles that I think it's important to state here is that for our industry it's important that the package delivery business is not subsidized by the U.S. taxpayer. I think that's a very important consideration set and hopefully that will be -- what will get adopted here.

The next question will come from Jon Chappell with Evercore ISI.

Thank you. Good afternoon. Brie, I was hoping to ask about tariffs. It's a narrative that seems to be dominating some of the sentiment around the group right now. You're a much different cost structure than you were in the first Trump administration. So just as it relates to tariffs, have you heard from your customers about any pull forward? And I guess, secondly, how would you manage your network if there were to be a surge in demand and maybe, more of like a short term as opposed to a long term secular shift?

Yeah. It's a great question. So from a December perspective, there might be a little bit of a pull forward. As we talked about, we are seeing some movement both in the freight network and in the parcel network from the ports. So there might be a little bit. It's hard to tell right now because we're in the middle of peak how much of that is inventory as well as how much is just consumer demand. So obviously, it will be much clearer in January. From a reaction perspective, I am really pleased with how quickly the airline team is able to respond right now. To Raj's point, we are doing things differently with DRIVE. So as far as being able to adapt, I'm very confident. As Raj has shared many times, we're everywhere. We have customer relationships everywhere. So as customers prepare to pivot, we're there to pivot with them. So it's very hard at this point to predict what might happen under our future administration, so we're not going to try to, but we are ready to respond with agility.

And Jon, let me just say that, as you can imagine, we are a referendum on global supply chains every single day and especially of the high value economy and we see this information from the bottom up. And the fact that we have a scaled network already in place that connects 99% of global GDP is a significant advantage because we can move our capacity much, much quicker than manufacturing can move. And so it is we are very agile, much different than what we've has been the case before. And that's -- one other thing I would say is that you can imagine that as part of our value proposition is an end to end delivery. In international that includes customs clearance. So we have the data, the expertise, the insights about what it takes to move package from one country to any other country and all the commodities they're in. So this becomes a competitive differentiation advantage for us as we make our customer supply chain smarter.

The next question will come from Scott Group with Wolfe Research.

Hey, thanks. Good afternoon. John, you said a couple of times that the post office headwind is bigger than the Cyber Week tailwind, but there's a lot more moving parts. And so maybe can you just clarify what you're trying to communicate around Q3 expectations? And then on the LTL spend, I just want to understand a couple of things. Why is it 18 months seems so long? And then as we do our math, is there any way to just think about if there's much, if any of the corporate unallocated costs that we should apply to LTL?

So, thanks, Scott. So, let me start with the 18 months. From a timing standpoint, the 18 month period for a transaction of this magnitude is really consistent with what is reasonable to expect. And we do look forward to keeping you posted on our timing and milestones along the way. So, we look forward to keeping you posted there. With regard to the Postal Service, as I mentioned in my remarks, we are on track to take out cost as planned with the U.S. Postal Service contract expiration. And we talked about the flight hours taking out roughly 60% of our U.S. Domestic daytime flight hours have been taken out and that makes up about 24% of our total daytime hours. We're also going after all the other related costs. So as I mentioned in my remarks, Q3 will be impacted because it will be a full three months of impact from the postal service contract and that will start to wind down in Q4 and we'll start to see as a tailwind into FY '26. So that just gives you some background and perspective. We're pleased with the work that's been done. There's more to be doing in taking that cost out. Hopefully that gives you some good color on the Postal Service.

The next question will come from Tom Wadewitz with UBS.

Yes. Good afternoon. Thanks for getting me on for a question. I appreciate it. Let's see, on the LTL and thanks for all the detail on this spin, it's complex, but it's helpful to hear your thoughts. Raj, would you anticipate that you get somewhat more volume focused with LTL in the future? You talked about the 1,100 basis points of improvement in the margin over a period of time. And I think that was driven by some of the change in focus on pricing and a lot of discipline. I'm wondering, would you anticipate that hiring a bunch of sales people focused on SMB, those things, would you potentially be more volume focused and maybe compete harder for freight in the future or is that the wrong way to look at it?

Hi, Tom, it's Brie. So I think first in the main, we're really pleased with the discipline that we've got across the team. From a revenue quality perspective, we've made great strides. As we look forward, we do see this as an opportunity to play offense. We are going to invest commercially in new salespeople. We know we've got an opportunity from a different industrial mix. And as I mentioned earlier, from a weight, while our weight is down right now in our base because of the macro, when we look competitively, we think there is some opportunity using technology to fill up the capacity. We know the FedEx Freight network right now can run very comfortably at 100 and 105. So we've got some opportunity to be a little bit more strategic, also to look at the 3PL market. So the answer is yes, we're going to play more offense and we think there's some great things to come.

The next question will come from David Vernon with Bernstein.

Hey, thanks for fitting me in here. So, coming back to Network 2.0, I think, Raj, you mentioned like 225 stations would be consolidated or something like that by the end of, I think it was fiscal 2025. Can you give us a sense for kind of what percentage of volume you might have touched with the Network 2.0 integration to date? And then as you think about the timing of when the more difficult to tackle major metros may start to be coming in play, is this a fiscal '26, fiscal '27 timeline? Just trying to get a better sense for when the rubber really starts to meet the road so to speak, on the physical integration of the core operations in the heart of the domestic network?

Yeah. Thank you, David. The FY '25 number is 250 stations integrated. I think the big lift is going to be in FY’26. So we have FY’26 and FY’27 are the two big years, but FY’26 will be the big lift for us for Network 2.0.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Raj Subramaniam for any closing remarks. Please go ahead, sir.

Thank you, operator. In closing, I'd like to thank our team members for delivering this outstanding peak season. We have five more days to go and I really look forward to a very strong finish. Let me wish all of you listening on this call a very happy holiday season. Thank you so much.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.