Stereotaxis reports 3Q 2025 revenue growth, driven by Genesis X approval and robust catheter sales, guiding for sustained growth through 2026.

OPERATOR - (00:01:25)

Good afternoon. Thank you for joining us for Stereotaxis' third quarter 2025 earnings conference call. Certain statements during the conference call and question and answer period to follow may relate to future events, expectations and as such constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company in the future to be materially different from the statements that the Company's executives may make today. These risks are described in detail in our public filings within the Securities and Exchange Commission, including our latest periodic report on Form 10-K or 10-Q. We assume no duty to update these statements at this time. All participants have been placed on a listen only mode. The floor will be open for questions and comments following the presentation. As a reminder, today's call is being recorded. It is now my pleasure to turn the floor over to your host, David Fischl, Chairman and CEO of Stereotaxis.

David Fischl - Chairman and CEO - (00:02:45)

Thank you Operator and good afternoon everyone. We are in an exciting period with... A lot of progress on multiple fronts. We've discussed our strategy and efforts more comprehensively on previous calls, so I'll keep today's remarks focused on a few key areas. Commercial and innovation updates. Our commercial activity can be viewed as two primary efforts. First, to scale robotic system sales with. Continued adoption of Genesys and the initial. Launch of Genesis X and second, to build a robust high margin recurring revenue. Business with our portfolio of novel catheters. These two efforts are independent but obviously synergistic and together support an attractive razor-razor-blade business model that can deliver. Substantial long term growth. On the capital side, we were pleased to receive hospital orders for two Genesis X. Robots since our last call. Both orders came from European hospitals establishing entirely new robotic programs. We expect expect both robots to be installed and to begin clinical use in the. First half of 2026. These Genesis X orders are reflective of the healthy pipeline and continued interest we see across our regions, particularly in Europe where. We are slightly ahead in having a More complete product ecosystem approved and commercialized. These orders add to our existing system backlog which at over $10 million supports a steady baseline of robotic system revenue. As demonstrated by our results over the last several quarters. The launch of Genesis X significantly enhances our system opportunity by removing structural barriers that limited physician interest from translating into tangible adoption. We were delighted yesterday to announce FDA approval. Approval for the Genesis X system. This is a landmark approval for Stereotaxis. There are very few companies that can successfully develop, gain regulatory approvals and deploy complex surgical robots that operate reliably in daily clinical use. This is Stereotaxis' second such robot in five years and reflection on our unique expertise and our capacity and commitment to significant innovation, we are initiating a limited launch of Genesis X while we await approval for the Magic Catheter work to enhance compatibility of the robot with various X rays and refine our supply chain. Manufacturing, installation and commercial processes for a full launch. While we are pleased with the steady demand for Genesis, we expect Genesis X orders to outpace the tempo of Genesis. Orders following full launch. Turning to our recurring revenue the key driver of growth over the coming years will be our budding portfolio of proprietary catheters. Stereotaxis recurring revenue has to date been predominantly driven by service contracts and a small single use disposable with relatively little revenue per procedure. Catheters are the primary disposable in any procedure and Stereotaxis did not previously benefit. From this revenue stream. The dearth of robotically steered catheters reduced interest in our technology and limited our revenue opportunity and razor blade business model. Over just the past year, we have started to demonstrate the tangible reality and commercial impact of our catheter portfolio with growing sales of Magic catheters following our acquisition of APT last year, adoption of the Magic Ablation catheter in Europe following CE Mark in the first quarter and over just the past two months, adoption of the Magic Sweep high density mapping catheter. In the US Following FDA approval this summer. Magic Sweep has been a particular recent highlight. On our last call, we described the importance of high density mapping in the EP field and how the introduction of. Robotic high-density mapping promised several clinical and workflow benefits. It is also important to note that Magic Sweep is Stereotaxis first catheter launch in the US and the first catheter innovation that allows our robot to be used in new ways, enabling clinical care that was previously not possible. We began commercial launch of Sweep in late August and have had a very exciting reception. To date, physicians have shared multiple examples of Magic Sweep, allowing them to better diagnose the source of arrhythmia safely and efficiently in areas of the heart that were otherwise inaccessible. With manual mapping catheters, the clinical interest in the catheter has translated into a strong commercial storm. With over $300,000 in sweep revenue in. The first two months of launch, we. Are still in the earliest innings of the launch with only about a quarter of robotic accounts in the US Ordering the catheter to date, as we work through multiple hospital approval processes. We are excited to see the catheter continue to scale its impact in the US as well as gain approval and launch in Europe. The commercial impact of Magic Sweep, measured in direct revenue and as importantly in the halo effect it creates for robotics in our field demonstrate the significant impact of innovation. We have a robust pipeline of innovation efforts that will continue to strengthen our commercial results. These include multiple products in the late stages of regulatory review, development projects, approaching submissions, and earlier stage efforts that haven't yet been disclosed. They span technologies including robotic systems, software solutions and several EP and vascular catheters and devices. I'll add a few brief updates and comments on three specific projects most impactful. In the short term. Magic in the US Pulse Field Ablation and the Synchrony Digital cath lab system Magic is our proprietary robotically navigated ablation. Catheter that will replace the older J. And J catheter used with our robot. We received CE Mark and launched the catheter in Europe earlier this year, have been working through manufacturing ramp up and country by country commercial processes and are working diligently with FDA to advance U.S. approval. Late in the third quarter, we responded fully to a body of questions that represented FDA's outstanding questions upon a comprehensive review of all modules in our submission. We maintain regular dialogue with FDA and appreciate their collaborative effort during the review. Pulse Field Ablation PFA has been a dramatic impact has had a dramatic impact. On the electrophysiology field over the last Couple years, driving billions of dollars in market growth and significant share shift among the large medtech players. The large medtech players. On previous calls, we described having a few earlier stage PFA collaborations with different partners working through the pre clinical testing process. Last month we were pleased to announce successful completion of preclinical testing and entering into a collaboration agreement with Cardiofocus to pair their PFA system with our Magic catheter. The agreement provides a framework for how we will advance this first ever robotic PFA solution through a first in human clinical study, regulatory approval and commercialization. Cardiofocus PFA Generator and our Magic Catheter both already have regulatory approval in Europe and so the effort to add compatibility to our label is expected to be relatively contained. We are preparing formal regulatory documentation to initiate first in human testing, expect to perform these procedures in the coming few months and believe it's possible to see Magic approved for PFA use in Europe. Before the end of next year. Finally, let me make a brief comment on Synchrony and Syncs, our digital solution that streamlines, modernizes and introduces secure remote connectivity to the Cath lab. In October we announced that we obtained CE Mark in Europe and had submitted the technology for FDA approval. The technology has received less attention than most of our other innovation efforts, but it holds significant promise as an entirely new business pillar. We have spent over six years and many millions of dollars developing Synchrony and Syncs building, benefiting from our previous experience with our Odyssey system but completely re. Architecting it with an improved technological foundation. Synchrony and Syncs are central to our digital surgery efforts to modernize the interventional lab with enhanced workflow, remote connectivity and smart AI capabilities. The technology improves the robotic cockpit, but we believe all Cath labs stand to. Benefit from improved workflow, connectivity, collaboration and intelligence. We had the opportunity recently to host leading EPS and technology administrators to evaluate the system. The feedback was very positive, describing it as the most well designed Cathode display technology they have seen. We expect Synchrony to contribute at least a couple million dollars of revenue in the first year of launch and a growing installed base will provide the foundation for an attractive software as a service. Revenue stream from our Syncs connectivity app and future AI features. Kim will now provide additional commentary on our financial results and then I will make a few financial comments as well before opening the call to Q&A.

Kim - (00:12:06)

A. Kim thank you David and good afternoon everyone. Revenue for the third quarter of 2025 totaled 7.5 million, system revenue of 1.9 million and recurring revenue of 5.6 million, compared to 4.4 million and 4.8 million in the prior year. Third quarter system revenue reflects partial revenue recognition on one Genesys system and ancillary devices. Recurring revenue growth over the prior year reflects a full quarter's contribution of mafic catheters and initial sales of Stereotaxis new robotically navigated devices, the Magic Ablation Catheter and the Magic Sweep high density Mapping catheter. Gross margin for the third quarter of 2025 was 55% of revenue. Recurring revenue gross margin was 67% and system gross margin was 19%. Gross margins remain impacted by fixed overhead allocated over low production levels. Operating expenses in 3Q10.7 million included $4.1 million in non cash charges for stock compensation, expense mark to market adjustment for acquisition related contingent earnout consideration and amortization of acquired intangible assets. Excluding these noncash charges, adjusted operating expenses in the quarter were $6.6 million, a decrease from $7.2 million in the prior year. Third quarter primarily due to lower general and administrative expenses, Operating loss and net loss in the third quarter of 2025 were $6.6 million and $6.5 million, compared to $6.3 million and $6.2 million in the previous year. Adjusted operating loss and adjusted net loss for the quarter excluding non cash charges were $2.5 million and $2.4 million, compared with $3.1 million and $3 million in the previous year. Negative free cash flow for the third quarter was consistent with the previous year at $4.2 million. At September 30, Stereotaxis had cash and cash equivalents of $10.5 million and no debt. Including the $4 million Stereotaxis will receive and the upcoming second closing of the registered Direct financing announced in July, stereo taxes would have had $14.5 million in cash with no debt. I will now hand the call back to David.

David Fischl - Chairman and CEO - (00:14:45)

Thank you, Kim. As mentioned in our press release, we expect revenue this quarter to exceed $9 million with system revenue of approximately $3 million and recurring revenue greater than $6 million. This will provide results. This will will result in over 20% annual revenue growth for the full year 2025, in line with our previous guidance of. Double digit annual revenue growth. While we are not yet providing formal guidance for next year, we want to offer directional color to help with modeling. We expect sustained growth of both system and recurring revenue through 2026, with system revenue benefiting from our existing Genesis backlogs and the launch of Genesis X and recurring revenue continuing to ramp. With increased adoption of Magic Sweep. And Map IT catheters. We expect quarterly revenue to surpass an average of $10 million per quarter in 2026. We continue to advance technologically and commercially while remaining prudent with expenses. We see significant leverage in our business with increased revenue. We expect to enter 2026 with a healthy balance sheet that allows us to advance our new technologies to market and launch them with a balanced focus on accelerating growth while also ensuring improved margins, earnings accretion and achievement of profitability. We'll now take your questions Operator, can you please open the line to Q and A?

OPERATOR - (00:16:14)

Thank you. Quick reminder before we start the Q and A, if you'd like to ask a question, please press STAR and the number one on your telephone keypad. If you'd like to withdraw your question or your question has already been answered, you may press Star one again and we will take our first question from Josh Jennings from TD Cowan. Please go ahead.

Josh Jennings - Equity Analyst - (00:16:40)

Hi, good afternoon. Thanks for taking the questions and congratulations on the Genesis X approval. I was Hoping to ask about Genesis X. A couple questions I guess first, just maybe an update on the sales pipeline for Genesis X. Mostly in Europe now with approval in the US but they talk about any pent up demand in the US and just how we should be thinking about the mix of orders going forward. I think you talked about Genesis X outpacing them, but should we think about more Genesis X placements next year or will there still be a healthy amount of Genesis placements in centers old customer accounts that are replacing their NIOBE systems?

David Fischl - Chairman and CEO - (00:17:24)

Hi Josh, thanks for the good questions. So Genesis X, I'd. I look at it as additive to Genesis. As you see just in the last. Quarter, even with Genesis X being approved in Europe, we continue to see demand for Genesis from sites that have been engaged with us for longer periods of time in the process that are either replacing existing labs or like the two hospitals that are establishing new robotic programs, they're building new wings to the hospital, new areas and the construction process then isn't as much of a factor for them. And so we continue to see demand. For that has generally been at a pace of approximately one to two systems a quarter. And so I think that's going to continue for the foreseeable period both in the US and Europe. Genesis X is really additive to that by offering access to robotics to many. Physicians that otherwise would have wanted it. But just couldn't advance through the process because of the challenges logistically at the hospital level. And so we have been engaging with. Multiple of hospitals in Europe over this past year. We've done a little bit of rework in the US with a few hospitals and, and, and so we have start to have a pipeline of physicians and hospitals that are interested in engaging with us. And we predominantly focus in the earlier. Periods on the sales process and we have historically always only sold our robot and we start to, as we ramp manufacturing and we feel comfortable with. with. The ability to supply the system at higher scale, we will also be opening up the model to leases and to placements with significant disposable commitments. And so that's really kind of over the next few months. Our goal is to make sure that manufacturing is in place to demonstrate that the system is working reliably in the real world in regular clinical use and then to be able to start a full launch. And we expect once we start a full launch that the rate of orders for Genesis X and sales of Genesis X is going to be meaningfully higher than what it's been to date with Genesys.

Josh Jennings - Equity Analyst - (00:19:47)

Appreciate that David. And then Just a reminder, is Genesis X going to be sold at a price point that's similar to Genesis or at a premium? And then just as you think about, as we think about the high level color you provide for 2026 and quarterly revenues averaging at 10 million plus range, are you within that? Are you assuming that Genesis X systems are sold to non EP accounts or neurovascular endovascular centers in 2026 or maybe just help us think about when that could kick in. Thanks for taking all the questions.

David Fischl - Chairman and CEO - (00:20:30)

Sure. So Genesis X is a newer technology. It'S a premium system. We expect the system to save a hospital materially on their own expenses. And we are pricing the system at a premium to Genesis. It's in the same ballpark but at a premium price to Genesis. And so we're comfortable with that decision and we believe the market is accepting of that as a reasonable, appropriate price. And when it goes to your second. Question on non EP applications, we do expect to have our first, at least 1, 2 non EP centers next year that will start using the robot in, in non EP procedures, we still do not have approval for guide catheter or guide wire. And so that is still. The guide catheter is in. It was was submitted earlier this year and we're still working through the regulatory process there. The guide wire we expect to submit for regulatory approval early next year. And so as those come to market, I would expect the majority of their use to be in existing robotic accounts where every EP department is part of an interventional cardiology department. There's easy access to the system for interventional cardiologists who want to start using the robot and experimenting with it in a range of other procedures. But we do also believe that there will be a few sites that do not currently have the robot where non EP applications are the driver of adoption.

Josh Jennings - Equity Analyst - (00:22:12)

Understood. Appreciate that. Thanks.

David Fischl - Chairman and CEO - (00:22:15)

Thank you.

OPERATOR - (00:22:19)

Thank you. Our next question comes from the line of Adam Mader from Piper Sandler. Please go ahead.

Adam Mader - Equity Analyst - (00:22:29)

Good afternoon. Thank you for taking the questions. I actually wanted to piggyback off of Josh's line of questioning and maybe starting on the Genesis X approval in the U.S. it sounds like that will be in a limited launch phase for at least a couple of months, if I'm hearing correctly. But David, are you able to put a finer point on when we should expect that to kind of move to full launch? It certainly sounds like you're working through supply chain a little bit. Understand you're waiting on the magic RF approval in the US I don't know if you can give a timeline update there as well. But just trying to think about when we move from the limited launch phase to kind of full steam ahead and then add a follow up. Thanks.

David Fischl - Chairman and CEO - (00:23:18)

Sure. So the two things you mentioned, obviously. Getting the MAGIC approval in the US and then kind of ramping our manufacturing are the kind of two major factors in transitioning from a limited launch to a full launch. And in terms of MAGIC in the. US I gave some color on the prepared remarks about our interactions with fda. I believe those interactions are going well. Things like the recent government shutdown, while they have some impacts on FDA activity, they don't seem to have any impact on the review of magic, which is funded as a PMA submission previously. And so even in very, very recent discussions, there seems to be no impact whatsoever from the shutdown on FDA's review. And so I think that's kind of advancing well. And we expect overall likely approval in line with what we've described previously. I would think that kind of, as. We have that approval also on the manufacturing side, we continue to grind through the process and to improve it. And so I think on our last call we described having produced the first Genesis X commercial. In the early summer period. We kind of built now another system. We are kind of ramping the manufacturing and the supply chain overall. Well, and that's just kind of a steady progress there. I'd say that kind of you should expect probably a transition to a full launch of Genesis X sometime in the earlier parts of next year at the latest. The natural time to do so would be at the ERA and HRS and HRS conferences, which are in the spring. That would be kind of the latest natural time to do so.

Adam Mader - Equity Analyst - (00:24:59)

That's really helpful color, David. Appreciate all that. And the second question is around the early commentary for 2026 and was hoping you could give us just a little bit more color in terms of how you're thinking about the revenue mix. You talked about the average of 10 million per quarter, but how that kind of bifurcates between system revenue and consumable revenue. Just any additional thoughts there would be much appreciated. Thank you.

David Fischl - Chairman and CEO - (00:25:30)

Sure. So that's always the split between system. And disposables is always difficult because systems are somewhat lumpy like you see in this quarter we were at the low end of the 2 to 3 million range that we kind of said we expect every quarter. In the fourth quarter we'll be at the high end of that range. And so it's kind of there's a lumpiness to that that shifts the percentage distribution between system and recurring revenue in any given quarter. Generally, if you're modeling this year's system. Revenue of about 10 million and recurring revenue in the low mid 20 million. Range, we expect the recurring revenues to. Scale relatively linearly as we, as we get kind of the catheters further approved and then further launched in each geography. I'd expect that to kind of continue to just scale as we go, account by account and gain adoption. And then systems will fluctuate. But generally you should expect numbers clearly in the teens or high teens in terms of the system revenue amount. And so that probably takes you where system revenue is going to end up being somewhere between, you know, 30 to 50% of overall revenue.

Adam Mader - Equity Analyst - (00:26:53)

Very helpful. I'll jump back in queue. Thank you.

David Fischl - Chairman and CEO - (00:26:56)

Thank you.

OPERATOR - (00:27:01)

Thank you. Our next question comes from the line of Frank Tarkinen from Lake Street Capital Markets. Please go ahead. Great, great.

Frank Tarkinen - Equity Analyst - (00:27:11)

Thanks for taking the questions and congrats on the Genesis X approval. Wanted to start with maybe some additional questions around the Magic FDA interactions. Can you talk to some of the questions that the FDA had for the Q3 response that you spoke to on the call? Any significant areas outstanding that they're still looking for? And then I realize it just went in at the end of Q3, but any, any response from them from that? Sure.

David Fischl - Chairman and CEO - (00:27:38)

So the FDA's questions which we were able to respond to at the end of the third quarter, were a comprehensive review. There's many modules included in a PMA submission. So you have obviously preclinical testing and clinical data, you have biocompatibility and sterility information, you have packaging information, you have your label, you have all the technical testing of the device. So it's really kind of. There's many, many modules to the PMA, many kind of sets of data. Their questions were explained to us as the result of their comprehensive review of all the available data that they had reviewed, which they viewed as kind of comprehensive for the submission. And so there was a range kind of across the different modules, definitely some on the clinical data, on the various kind of sterility, biocompatibility portions, but really kind of it was a comprehensive set of questions. We responded to those we felt good about our response. There was nothing strange or particularly troublesome in the questions. So it's still an effort to respond to everything. But we felt kind of good with the tone and the content and the questions. We felt good with our responses. And as described in the prepared remarks, we do maintain regular dialogue with FDA on all our submissions. But obviously Magic is a particularly Significant one and communication since then, nothing in writing. We feel overall good with them having received the response and able to review the response fully and access all the documentation that we provided. And so we see things kind of continuing to progress as would be wanted.

Frank Tarkinen - Equity Analyst - (00:29:39)

Okay, that's helpful. That's great. And then maybe just one on the Q4 guide. I think originally we were expecting something like 7 million in revenue in the disposables and service line for Q4. I think now that's at 6 million. Maybe talk through some of the changes in assumptions for Q4. Now I realize you said at least 6 million, so at least the door open for higher than that. But just curious if there's any change in assumptions.

David Fischl - Chairman and CEO - (00:30:10)

Sure. So we provided the original guidance at the beginning of this year. At the beginning of this year, we. Didn'T know exactly when we would receive FDA approvals for the various devices or CE marks for the various devices we've had. From the catheter perspective, the, the two main drivers of recurring revenue growth were going to be Magic Sweep and Magic in both, both geographies for both catheters. So far we've gotten two out of the four approvals done. We got Magic approved in Europe, we got Magic Sweep approved in the US and we're still working on the two other approvals. And so I think just given, given the timing of those approvals and given what we've seen to date in the ramp, we're happy with the ramp of the devices, particularly Magic Sweep. I think it's a, it's, it's a reflection of the US market environment where there's far fewer structural barriers to gaining adoption. But so we've been overall very pleased with, with the tempo of adoption, but we're still in the earliest innings. And so we think that guidance kind of feels appropriate at this time.

Frank Tarkinen - Equity Analyst - (00:31:26)

Got it. Okay, that's helpful. Thanks for taking the questions.

David Fischl - Chairman and CEO - (00:31:30)

Thank you, Frank.

OPERATOR - (00:31:34)

Thank you again. If you have any questions, please press star and the number one on your telephone keypad. Our next question comes from the line of Kyle Bowser from Roth Capital Partners. Please go ahead.

Kevin - (00:31:51)

Hi, this is Kevin on for Kyle. Thanks for taking our questions and congrats on the Genesis X. Just kind of starting with the Genesis X and all the new catheters. How should we be thinking about the headcount of the commercial organization expanding over the next 12 to 24 months?

David Fischl - Chairman and CEO - (00:32:15)

Hi, Kevin, thanks for the question. We've discussed in the past that as. We, on the clinical side of the. Business, we have about a total commercial team of approximately 40 people globally, about 20 of them in the US, 15 or so in Europe, and then a smaller team in Asia. We've talked about how the clinical team particularly will see meaningful growth over the coming year or two. We, we expect as we are scaling catheter revenue that we will shift more and more to a model where you can have a one to one relationship between clinical reps and hospitals. That is something that in our field typically there's more than one clinical rep per hospital. We've always had one for every three or four hospitals. And so having catheter revenue as part of our product mix allows you to sustainably and attractively grow your clinical team to have that style of coverage that, that can be done kind of in a profitable fashion that can also kind of then help drive greater utilization. And so that's kind of probably the largest source of growth will be in that clinical team. On the capital side, we've done everything to date with a very, very lean dedicated capital team and some additional contribution from sales management. We, as we shift to a full launch of Genesis X and are comfortable that we can scale Genesis X system sales to the dozen, couple dozen in short order, then we will start to invest incrementally in probably a handful or so dedicated capital reps that can really kind of push that model much further.

Kevin - (00:34:13)

Great, thank you, that's very helpful. And then maybe just kind of focusing in on the disposables business and catheters. I know, you know, with the launches of Magic and you know, you're working with cardiofocus on the PSA and that collaboration there, but longer term, are there any other, you know, opportunities with the disposables business and maybe building out this portfolio, you know, that you're kind of looking at?

David Fischl - Chairman and CEO - (00:34:42)

Definitely there's a lot of thought and a lot of energy being spent on the disposable side of the business. I think that's where obviously most businesses. Make most of their money, most of their revenue from catheters, most medtech companies. And that's also, and that's the higher. Margin aspect of the business. And, and strategically there is also something. That our robot has been reliable and kind of special in, allowing physicians to do things that were otherwise impossible. But a robot is only as good as the catheters it can also deliver. And so a robot by itself without a portfolio of catheters has limited value. And so I think there's a lot of opportunity now that we have catheter R and D and manufacturing expertise and infrastructure in house. There's this kind of beautiful breadth of fresh air in terms of being able to play with ideas and to think about things much more aggressively than we have in the past. I think that kind of the overall portfolio mix of having three main portfolios of interventional devices makes a lot of sense for the coming few years. And that is really the magic family of catheters, which are robotically steered ablation, cardiac ablation catheters, both therapeutic and diagnostic. Robotically steered catheters in the cardiac ablation field. Then imagine which it stands for. Endovascular magnetic interventions are various interventional guide wires, guide catheters, microcatheters, similar devices of that sort of for vascular navigation and then map it, which are manual diagnostic EP catheters. And so I think you're going to see continuous innovation in those three categories. There are. There's a pipeline beyond that which has been disclosed to date. There is a pipeline that we have been working on. And so I think you're going to see a steady tempo of innovation beyond what we've discussed today.

Kevin - (00:36:55)

Appreciate all the color, David. Thank you. I'll hop back in the queue.

David Fischl - Chairman and CEO - (00:36:59)

Thank you.

OPERATOR - (00:37:04)

Thank you. There are no further questions. I will now turn the call back to Mr. Fischel for closing remarks.

David Fischl - Chairman and CEO - (00:37:13)

Okay. Thank you for all the questions. We'll work hard on your behalf to finish the year strong and to set things up for very successful 2026. Thank you very much.

OPERATOR - (00:37:26)

The meeting has now concluded. Thank you all for joining. You may now disconnect.