Mollie O'Brien - Best Buy Co., Inc. Hubert Joly - Best Buy Co., Inc. Corie Barry - Best Buy Co., Inc.

Scott A. Mushkin - Wolfe Research LLC Peter Jacob Keith - Piper Jaffray & Co. Seth I. Sigman - Credit Suisse Securities (USA) LLC Alan Rifkin - BTIG LLC Mike Baker - Deutsche Bank Securities, Inc. Christopher Horvers - JPMorgan Securities LLC Kate McShane - Citigroup Global Markets, Inc. Matthew McClintock - Barclays Capital, Inc. Simeon Ari Gutman - Morgan Stanley & Co. LLC

Ladies and gentlemen, thank you for standing by and welcome to Best Buy's Q3 Fiscal Year 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this call is being recorded for playback and will be available by approximately 11:00 AM Eastern Time today. I'll now turn the conference call over to Mollie O'Brien, Vice President, Investor Relations. Mollie, please go ahead. Mollie O'Brien - Best Buy Co., Inc.: Good morning, and thank you. Joining me on the call today are Hubert Joly, our Chairman and CEO; and Corie Barry, our CFO. This morning's conference call must be considered in conjunction with the earnings press release we issued this morning. Today's release and conference call both contain non-GAAP financial measures that exclude the impact of certain business events. These non-GAAP financial measures are provided to facilitate meaningful year-over-year comparisons, but should not be considered superior to, as a substitute for and should be read in conjunction with the GAAP financial measures for the period. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and an explanation of why these non-GAAP financial measures are useful can be found in this morning's earning release, which is available in the Investors section of our website, investors.bestbuy.com. Today's earnings release and conference call also includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements address the financial condition, results of operations, business initiatives, growth plans, operational investments and prospects of the company and are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Please refer to the company's current earnings release and SEC filings, including our most recent 10-K, for more information on these risks and uncertainties. The company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. I will now turn the call over to Hubert. Hubert Joly - Best Buy Co., Inc.: Thank you, Mollie and good morning, everyone, and thank you for joining us. I'll begin today with a review of our third quarter performance, briefly discuss holiday and then review some of the progress we're making against our Best Buy 2020: Building the New Blue strategy. I will then turn the call over to Corie for additional details on our quarterly results and our financial outlook. So today, we are reporting strong top and bottom line results for the third quarter of fiscal 2018. We grew Enterprise revenue 4.2% to $9.32 billion, which is a 4.4% Enterprise comp, and we increased earnings per share 30% to $0.78 compared to $0.60 last year. These results include the negative impact of 2 significant factors. First, despite what we characterize as moderate expectations for mobile phone launches in the quarter, revenue in the mobile category was materially lower than expected. This was due to the fact that a major new phone did not start selling until November, which is the first month of our fourth quarter. This resulted in significant softness in sales of existing mobile phone models in October as customers delayed their purchases. The related revenue impact in the quarter was more than $100 million. Second, like most retailers, we felt the impact of the natural disasters in South Texas, Florida, Puerto Rico and Mexico. Our first priority during these disasters was, of course, the safety and well-being of our associates in the affected communities, and we're happy to share that all of our associates are safe even though some of them suffered material losses. We estimate the negative impact to our Enterprise comparable sales was 15 basis points to 20 basis points, and that with the related costs, including insurance, deductibles, repairs and employee-related pay, our earnings were negatively impacted by approximately $0.03. Now despite these two factors, the results we are announcing today are within the earnings guidance we shared in August and are strong in absolute terms. Earlier this year, we announced the launch of our growth strategy, Best Buy 2020: Building the New Blue. And well, we're growing. In fact, year-to-date, our revenue growth rate is 3%. This is materially above what we had guided at the beginning of the year. Technology innovation is fueling demand, and our strategy is resonating with our customers. And while we are investing in key initiatives and capabilities, we're also able to generate significant returns for our shareholders through the growth of our EPS and our capital allocation strategy. As such, I want to thank all of our associates for their great work in delivering these results. I am incredibly proud of the collective and individual talent, the heart and the soul of this organization. Looking ahead, we are excited about our plans for holiday. Our teams across all functions are ready and keen to take care of our customers online, in our stores or in the customer's home. We have a curated assortment of great new products across multiple categories, including smart home, phones, gaming and tech toys. We have a compelling promotional calendar with strong brand messaging. We are, again, this year, offering free shipping with no minimum, and we're offering a range of new capabilities, including our new In-Home Advisor program now available nationwide, an updated gift center and same-day shipping in 40 cities. So while we are, as always, thoughtful about product availability during the fourth quarter, we're increasing our top line and bottom line guidance both for the fourth quarter and, again, for the year. Now we'll review some of our progress in the implementation of our Best Buy 2020: Building the New Blue strategy. We are excited by the opportunities we have in this next chapter to develop deeper and stickier relationship with our customers and build a strong, vibrant, growing company with significant competitive advantages. We are committed to building a company that can thrive in both today's and tomorrow's environments. As we laid out at our Investor Day in September, Best Buy 2020 is designed to take advantage of key growth opportunities by expanding what we sell and evolving how we sell. The work we're doing in the smart home space is a great example of how we are expanding what we sell. We plan to build on our leading position in the smart home market by continuing to expand our curated assortment, demonstrating new technology solutions in a meaningful way and expanding in the solutions and services part of the market. We believe needs-based demonstrations and experiential merchandising are critical, and we have a unique capability to showcase the products, both online and in store. In this spirit, as we head into holiday, all of our stores have enhanced smart home departments. In addition, as previously announced, 700 stores have new Alexa and Google experiences developed in collaboration with Amazon and Google and 450 stores have a Best Buy Smart Home powered by Vivint home automation and security offering. To complement all of this, we've added an incremental 1,500 dedicated smart home store employees to make sure that when you come to shop with us, we'll do a great job identifying what smart home solution would work best for you. As we discussed at our Investor Day, as a natural offshoot of our smart home focus, we are testing opportunities to leverage technology to help the rapidly growing segment of aging seniors stay in their homes as long as possible. We're piloting a service called Best Buy Assured Living that uses a non-invasive set of smart home connectors and sensors to help adult children remotely check in on the health and safety of their aging parents. Aging parents also benefit from the increased automation in their home such as connected door locks and smart lighting. We're very early here, piloting the opportunity in the twin cities of Minneapolis and St. Paul and in the Denver market. As it relates to supporting customers, we're also focused on expanding what we sell. We believe that customer support needs are not limited to a specific product. The need now is to have all of their technology working together to improve and simplify their lives as promised. Total tech support is a new Geek Squad offering that provides support for all of the customers' technology no matter where or when they bought it. This support is available to customers 24/7 via online, in store and phone and includes significant discounts if in-home services are needed. In September, we expanded the pilot to just over 200 stores across 10 cities in the U.S. Meanwhile we are evolving how we sell to focus not only on selling products but also on solving customers' underlying needs. We see material opportunity in our ability to continue to improve the customer experience within and across channels. Almost all of our customers currently use both the store and the online channel, and they have different expectations on what the channels should do for them depending on their mindset. As an example, customers often use the online channel when they are most certain about their purchase and the store channel when they are less certain. In our online channel, we've made a great deal of progress and have driven innovation, and we continue to see strong growth in online sales. In Q3, we grew online sales 22% to $1.1 billion, which is now 13% of our Domestic revenue. We've also significantly improved the in-store experience as evidenced by increased NPS scores and our revenue growth. Going forward, we see continued opportunity in examining how customers use the various channels in their shopping journey and designing and linking experiences across channels. Ultimately, this makes it easier for customers to start their shopping process online and finish it in the store or vice versa. We are notably using this approach to more effectively address customer needs in areas where we have significant growth potential, particularly appliances and mobile phones. In appliances, for example, where a significant portion of sales are the result of broken appliances that need to be replaced, we are making it clear to customers searching online which appliances are available realtime at their local store for those customers who'd like to replace very quickly. In mobile, we're enhancing the online experience to smooth pre-orders and streamline phone choice, allowing customers to do most of the work online before they pick up their phone in store for activation. We're also improving the in-store experience to make the various carrier pricing options more clear, reducing the time it takes to activate a phone and using text alerts for clarity on the timing of activation. We're also focused on building our in-home channel. To that end, in September, we expanded our In-Home Advisor program to all major U.S. markets with 300 advisers. The In-Home Advisors are professional sales consultants with broad product knowledge, who have completed an extensive five week training program. They provide free consultations and serve as a single point of contact for customers covering all technology needs across all vendors. Our advisers are still ramping up, and we continue to be pleased with the results of the program. In fact, based on the early results, we're planning to expand the number of advisers to 335 by early next year based on initial demand. To deliver on our strategy, we're investing in a range of enablers. We have built a great set of assets over the past several years, and we're expanding on these assets by investing in key capabilities and tools. So, for example, we're making technology investments in Enterprise customer relationship management, the services platform and knowledge management tools. We're investing in our supply chain to build for volume, choice, speed and efficiencies that help us offset the normal volume-based increases in expense. For example, during the quarter, we opened a new distribution center in Compton, California, in time for the busy holiday season. As we've begun work on some of these investments, this is resulting in higher capital and operating expenses this year, and this is going to be a multiyear journey, which is why we are committed to creating efficiencies to help fund investments and offset ongoing pressures in the business. After reducing costs by $1.4 billion in the past five years, our current target, established in Q2 of this year, is $600 million in additional annualized cost reductions and gross profit optimization to be completed by the end of fiscal 2021. During the quarter, we achieved $50 million towards our new goal to a total thus far of $100 million. So in summary, we delivered strong top and bottom line results in the third quarter despite the pressure from the later iconic phone launch and the multiple natural disasters. We've also made significant progress against our Best Buy 2020 strategy to position us well for long-term value creation. Additionally, we returned approximately $1.5 billion in cash to our shareholders so far this year through both dividends and stock buyback. We are pleased to announce that we're planning to spend approximately $2 billion on share repurchases this fiscal year, ahead of our original expectation of $1.5 billion. With all of this momentum as backdrop, we believe we are well-positioned for a successful holiday season and are, therefore, raising our financial outlook for the fourth quarter and for the year. So, again, I'd like to thank all of our associates for their work this last quarter and for, of course, what they will do this holiday season. You all are amazing. And now I'd like to turn the call over to our CFO, Corie Barry, for more details on our Q3 performance and our Q4 guidance. Corie Barry - Best Buy Co., Inc.: Thank you, Hubert. Before I talk about our third quarter results versus last year, I would like to talk about them versus the expectations we shared with you last quarter. On revenue of $9.32 billion, we delivered diluted earnings per share of $0.78, both of which were within our guidance range. As Hubert discussed, we saw strong top line growth with positive comps across almost all of our product categories. However, the lower than expected mobile phone revenue caused by the later phone launch, estimated to be more than $100 million, was material enough to pull our comparable sales below our comparable sales guidance range. In addition, as Hubert mentioned, we estimate that natural disasters had a 15 basis point to 20 basis point impact on our Enterprise comparable sales and a $0.03 negative impact on our earnings per share. Like many other companies, we made decisions to support our employees, our customers and our communities, including organizing the delivery of much needed supplies to our associates in Puerto Rico, where we have three stores and a distribution center, within a few days of the devastation. Many of these decisions came at a cost, but they were definitely the right thing to do. Slightly offsetting these pressures are lower than expected Q3 tax rate provided a $0.02 benefit. I will now talk about our third quarter results versus last year. Enterprise revenue increased 4.2% to $9.3 billion. Enterprise diluted earnings per share increased $0.18 or 30% to $0.78. This increase was primarily driven by the flow-through of higher Domestic revenue, a $0.07 per share benefit driven by a lower effective income tax rate and a $0.04 per share benefit from the net share count change. These increases were partially offset by higher Domestic SG&A from expected increases in growth investments and higher variable costs due to increased revenue. Additionally, we had $25 million or $0.05 per share of net negative impact from lapping the Q3 fiscal 2017 periodic profit-sharing benefit from our services plan portfolio. In our Domestic segment, revenue increased 3.6% to $8.5 billion. This increase was primarily driven by a comparable sales increase of 4.5%, partially offset by the loss of revenue from 10 large-format and 44 Best Buy Mobile stores closed during the past year. From a merchandising perspective, we saw positive comps across almost all of our product categories with the largest drivers being appliances, computing and smart home. As it relates to the home theater category, the industry was down for the third straight quarter, but our Q3 sales were up slightly on a year-over-year basis, resulting in another quarter of material share gains in this category. As Hubert mentioned, mobile phone revenue was impacted by the timing of launches. Even though we saw $100 million of pressure, revenue in the mobile category was up slightly on a year-over-year basis. Domestic online revenue of $1.1 billion increased 22.3% on a comparable basis, primarily due to higher conversion rates and higher average order value. International revenue of $829 million increased 10.1%. This increase was primarily driven by approximately 530 basis points of positive foreign currency impact and comparable sales growth of 3.8% due to growth in both Canada and Mexico. Turning now to gross profit, the Enterprise gross profit rate decreased 10 basis points to 24.5%. The Domestic gross profit rate was flat versus last year at 24.7%. Improved margin rates across multiple categories, particularly in computing and smart home, were offset by, one, margin pressure in the appliances categories; and two, an approximately 25 basis point negative impact from lapping the $25 million Q3 fiscal 2017 periodic profit-sharing benefit from our service plan portfolio. The International gross profit rate decreased 210 basis points to 22.2%, primarily due to a lower year-over-year gross profit rate in Canada due to lower sales in the higher margin services categories, mainly driven by the launch of Canada's total tech support offer, a long-term recurring revenue model. Now turning to SG&A. Enterprise SG&A was $1.93 billion or 20.7% of revenue, which increased $42 million on a dollar basis, but represented a 40 basis point rate decline. Domestic SG&A was $1.75 billion or 20.6% of revenue, an increase of $31 million. This increase was primarily due to expected increases in growth investments, higher advertising expenses and higher variable costs due to the increased revenue. These increases were partially offset by the flow-through of cost reductions. The 40 basis point rate decrease was driven by sales leverage. International SG&A was $181 million or 21.8% of revenue, an increase of $11 million. This increase was primarily driven by the negative impact of foreign exchange rates. The 80 basis point rate decrease was primarily driven by sales leverage. From a cash flow perspective, we ended the third quarter in line with our expectations. On the balance sheet, our inventory and payables were up 5% and 6% year-over-year, respectively, due to our strategic decision to bring in more inventory early, ahead of the holiday quarter. As it relates to capital expenditures, we are now expecting to spend approximately $750 million to $800 million in fiscal 2018 as we have chosen to accelerate certain strategic investments in our e-commerce and supply chain functions. This is versus our previous expectation of approximately $700 million. I would now like to talk about our full year fiscal 2018 guidance which, as a reminder, has 53 weeks versus 52 weeks last year. We are raising our revenue growth outlook to approximately 4% to 4.8% versus our previous outlook of approximately 4%. And we are raising our non-GAAP operating income growth outlook to 7% to 9.5% versus our previous outlook of 4% to 9%. As a result, we are raising our Q4 outlook versus what was implied in the annual expectations provided on our last earnings call. Our Q4 Enterprise revenue guidance is $14.2 billion to $14.5 billion, with comparable sales growth of 1% to 3%. On a segment basis, we are expecting Domestic comparable sales growth of 1% to 3% and International comparable sales growth of flat to 3%. Our Q4 non-GAAP diluted earnings per share from continuing operations guidance is $1.89 to $1.99. Our Q4 EPS guidance assumes a non-GAAP effective income tax rate of 36% to 36.5%, which is materially higher than last year's 30.2%, which benefited from a number of discrete items. Finally, our guidance assumes a diluted weighted average share count of approximately 296 million shares. Our Q4 guidance reflects a number of factors. First, as we discussed on last quarter's call, we made strategic decisions to proactively make additional investments in the back half of the year to continue to drive the Best Buy 2020 strategy forward. Those additional investments are in areas such as customer choice in shipping, e-commerce and our long-term strategic vision for supply chain. Second, the outlook includes approximately $20 million or $0.04 per share of lower profit share revenue than we received last Q4. Third, our fourth quarter and full year performance is expected to drive higher incentive compensation expenses in the fourth quarter than last year's fourth quarter. This higher incentive compensation is due to both better performance this year and the fact that we are lapping a reversal of incentive compensation expense in Q4 fiscal 2017 that adjusted accruals from earlier quarters of the year. Fourth, as a reminder, the extra week in the quarter adds approximately $100 million of additional SG&A expense. I will now turn the call over to the operator for questions.

Thank you. We'll go first today to Scott Mushkin with Wolfe Research. Scott A. Mushkin - Wolfe Research LLC: Hey, guys. Thanks for taking my questions. Hubert Joly - Best Buy Co., Inc.: Good morning, Scott. Scott A. Mushkin - Wolfe Research LLC: So wanted to get your thoughts on the TV category as we get into the fourth quarter, and then my second question would be just labor costs, not only in the fourth quarter, but as we look out to next year, we're getting a lot of noise from people that it's becoming a pretty big problem. Wanted to get your take on that? So, those two things. Thanks. Corie Barry - Best Buy Co., Inc.: So I'll do my best here, and then maybe Hubert can add a little bit more color. In terms of TV, I mean, the first thing that I would say is we continue to be very excited about the technology innovation in the category. And within that, we feel like we're very uniquely positioned to show off those new technologies. Obviously, according to what we can see in the NPD data, in Q3, the industry TV revenue was down about 5%, which was better than the down 10% we saw in the first part of the year. For us, we actually – we saw that business was up slightly in the quarter. Similar to Q2, units were down, but ASPs were up, and a big part of that was mixing into those bigger screen sizes and more fully featured technologies. We like that positioning heading into the fourth quarter. Obviously, it's a highly competitive quarter, but we're excited about the plan that team has put together, and we think we're really well positioned. On top of that, you asked a little bit about labor expenses. One of the investments we have actually called out over almost the last two years is continued investments in specialty labor. And we, first of all, have been a little bit better positioned than some other retailers just given that a vast majority of our labor is a little bit more highly compensated as it is already specialty labor, and then we've been making investments on top of that to ensure we remain very competitive in the marketplace. So for us, we feel like that has been a piece of the investment, and we even said at Investor Day that likely going forward will continue to be a piece of the investment thesis. Hubert Joly - Best Buy Co., Inc.: One thing I would add on this, Scott, is that we believe one of the drivers of our very strong performance is the much reduced turnover of the labor in the stores. We think it's at the historical low, it's been materially reduced really as a result of great leadership and focus on that to make it an exciting place to work together with the compensation, but there's other actions. And of course, if you have lower turnover, people are more proficient. It's a reflection of more engagement, and I think we've got a lot of feedback on the level of energy and proficiency in the stores, and we're very excited by it, and we're committed to continuing to work on this and to make it a great place, great employee experience resulting in a great customer experience. Scott A. Mushkin - Wolfe Research LLC: Thanks, guys. Thanks for the thoughts. Corie Barry - Best Buy Co., Inc.: Thank you.

We'll go next to Peter Keith with Piper Jaffray. Peter Jacob Keith - Piper Jaffray & Co.: Hey, thanks. Good morning, guys. Nice results. Was curious just on continuation of the industry backdrop balance versus market share. Could you give a perspective maybe on how NPD trended for your categories? And then do you feel like with this pickup in same-store sales growth that it's partially a result of accelerating market share gains in the industry? Hubert Joly - Best Buy Co., Inc.: Yeah, thank you for your question. NPD performed much better, and it's not the first quarter, but it's around plus 2%, something like that. And of course, as you all know where we compete is much broader than NPD. We think appliances is performing well, but mobile, not maybe so strong this quarter. So there's a lot of – but in general, what we're seeing is technology innovation driving demand. And we spent quite a bit of time during Investor Day sharing our enthusiasm for the fact that this is an opportunity rich environment. When we look ahead, the pace of innovation, how meaningful it is and of course, the help that customers need, that creates a rich environment for us. In the quarter, to your question, we continue to gain market share. The pace of market share gain is relatively steady, steady as you go. And so the strong performance in the quarter, as I said in my prepared remarks, is really the combination of technology innovation and the fact that our strategy is continuing to resonate. And we like that combo because it's – and hopefully, you see it as a great company in a great neighborhood. Peter Jacob Keith - Piper Jaffray & Co.: That's great. And maybe a quick follow-up, Hubert. There was a nice pickup in the appliance category this quarter with an acceleration. Could you provide a little bit of color on what drove that? Hubert Joly - Best Buy Co., Inc.: Yeah. We think that – I mean, the housing recovery by all measures is still young and still very far from the peaks we have seen a few years ago. So that's helpful, and we're continuing to gain share in this category. The fact that, of course, some competitors have suffered is another factor, but I would highlight, as far as what we can control, the continued investment in the customer experience. Our teams, rightfully so, are very proud of the fact that we were awarded the best performance by J. D. Power and Associates from a customer experience standpoint across all of their seven criteria. We're continuing to invest there. We think we continue to have many opportunities. So in general, strong category, strong focus on customer experience, and we think that this is an opportunity that's rich with opportunities for us. So excited about that. Peter Jacob Keith - Piper Jaffray & Co.: Thank you very much. Good luck with the holiday season. Hubert Joly - Best Buy Co., Inc.: Thank you.

We'll go next to Seth Sigman with Credit Suisse. Seth I. Sigman - Credit Suisse Securities (USA) LLC: Thanks. Good morning. I wanted to follow up on the Q4 outlook. So you're guiding to comps in the 2% range at the midpoint. Can you just remind us some of the things that were lapping from last year, including the Note7? You had some product supply issues. If we assume that you get some of that back or maybe even a lot of it back, and then you have this $100 million shift from Q3 to Q4, it would basically imply that the rest of the business would be down slightly in the fourth quarter. Obviously, it's been trending much better than that. So just wondering is that math, right? Is there reason for that other than just conservatism and that a lot of the holiday is still ahead of us? Thanks. Corie Barry - Best Buy Co., Inc.: Seth, as per usual, you are very good with math. You're absolutely right. And that if everything performed perfectly, so as a reminder, last year we had $200 million of Note revenue we estimated on the quarter and than we said another $100 million to $200 million related to product shortages, because it's not a perfect science. We said thought that was the range. So $300 million to $400 million. And then obviously, there's the question of moving some of the volume from Q3 into Q4. Not all those things are perfectly additive because remember, where we saw some of the product shortages was in phones. And so that -you're kind of double counting there, obviously. And the underlying business, it's not that we particularly see a lot of risk. I think we're trying to be thoughtful about the puts and takes across the business. And obviously, during the holiday season and the competitive environment that you're going to see, not everything performs exactly like it does in Q2 and Q3 leading into the season. And so we do feel like we're very well-positioned. We feel like this range is thoughtful given the plans that we have in front of us, and it does incorporate all of those factors back into it. And obviously, like Hubert even said in the prepared remarks, we're always thoughtful again about availability as we head into the quarter. Hubert Joly - Best Buy Co., Inc.: The only thing I would add, Seth, is that when we do the scorecards, we're mindful or thoughtful about share of wallet. There's only so much that customers will spend during the quarter. And if one category or one type of product do better, it's exciting, but there's secondary effects. So we're trying to be thoughtful about this, and so the 1% to 3% outlook reflects our best thinking that's what I would say. Seth I. Sigman - Credit Suisse Securities (USA) LLC: Okay. That's very helpful. Just follow-up question on your store comps. So if you exclude e-commerce, they've been up about 2% over the last two quarters, a pretty meaningful improvement. Can you just help us better understand the drivers of that? Are you seeing traffic actually pickup in the stores? Is that better conversion as you've improved service? Is it a change in basket? Any color there would be helpful. Thank you. Hubert Joly - Best Buy Co., Inc.: Sure, happy to provide color. This is a great call out and a great reflection on the role that stores play in our category and of course, the great performance of our store teams across the company. I think we're seeing significant shifts in customer behaviors in terms of what they buy online and what they buy in the stores. So clearly, from a traffic standpoint, we're continuing to see traffic decline as customers tend to buy online the higher frequency, smaller items, and they tend to focus their trips to the store for more discovery, experiential discovery, interaction with our great Blue Shirts and gravitating to higher-ticket items, more complex solutions in the stores. So clearly, we're seeing increase in the basket or the average order value in the stores, also higher conversion rates. In fact, based on the higher proficiency and great engagement of our store associates, but also the fact that customers have done more research before they go to the stores. So you see a significant shift in the performance. But in totality, we're very excited about how we can help customers online and in how we can do great things for customers in the stores. And then looking ahead, I think we're going to continue to – you had felt our excitement about the in-home channel and I had some comments about how the initial response to our In-Home Advisor program is very, very positive. So lots of excitement in our ability to help customers online, in the stores and in their home is, in fact, a unique competitive advantage. And we're happy with how it's resonating with customers. Seth I. Sigman - Credit Suisse Securities (USA) LLC: Okay, great. Thanks very much and good luck for the holiday. Hubert Joly - Best Buy Co., Inc.: Thank you Seth. Corie Barry - Best Buy Co., Inc.: Thank you.

We'll go next to Alan Rifkin with BTIG. Alan Rifkin - BTIG LLC: Thank you very much. I'll add my congratulations as well. Hubert Joly - Best Buy Co., Inc.: Thank you. Alan Rifkin - BTIG LLC: First question relates to services. Obviously, it's a major initiative for you guys going forward. But if you look at the performance in this quarter, the comp performance within that category was the lowest of any category on what is the lowest base. I was wondering, and I understand it's early in the program, but where are you in terms of growing the services business compared to your early expectations that you laid out? Hubert Joly - Best Buy Co., Inc.: Yeah. Thank you, Alan. What we report in the comps in services is compared to what we're looking at for the future, a relatively narrow view of services. To a very large extent, it's the commission on the warranties as well as some of the tech support services from the Geek Squad. As you look at the overall strategy Best Buy 2020, there's many service-oriented components of the strategy that are actually not reflected in that number and will not impact that particular line. In-Home Advisor, as a great example, is a free consultation in the customer's home. So no revenue from the consultation, and of course, it triggers these enhanced revenues that are largely product and some services. So it's a service-oriented approach. Similarly, the more we're moving to managed services such as Best Buy Smart Home powered by Vivint, that's not today in that line either. So the service – and looking ahead, we may – we're going to think about how to best keep everyone on that journey so that we have some meaningful indicators. We're going to take our time to think about this. But – so hopefully, I'm clear in the fact that the service line is a narrow view of what is an overall service-oriented, customer-oriented strategy. Now on the performance in the quarter of that line, our business today in services is largely an attached business related to extended warranties and some installation services. The number is broadly in line with the comps, the aggregate comps, as it's an attached business. So not surprising that in the short term, there's no material change. Corie, anything I would have missed on that? Corie Barry - Best Buy Co., Inc.: No, I think you hit it. Hubert Joly - Best Buy Co., Inc.: Okay. Thank you. Alan Rifkin - BTIG LLC: Thank you, Hubert. I appreciate that explanation. The second question has to do with mobility and in particular, obviously, the iPhone launch. Can you maybe talk about your allocations of the new iPhones compared to past allocations? And historically, what type of lift to traffic in the stores has a new launch of an iPhone given you? Thank you very much. Hubert Joly - Best Buy Co., Inc.: Yeah. Thank you for your question, Alan. I am very excited about a number of things. One is how our teams have improved the customer experience, in particular around launches, and it's a good – one thing is the allocations. I won't give you specific numbers about a specific product, but let me just say, in general, we have great relationship with the key handset vendors, and we work very closely with them. But in terms of what we control, the work we've done online, in particular, to facilitate the pre-order process is very, very strong and then the ability to continue to take orders even when the delivery lead times extent, we've worked with the key vendors on making it easier to continue to take pre-orders for out times. We have described on the call we've improved all of this, both online and then in the store. So really great performance there, making it easy to do most of the work online and then making it easier to purchase in the stores. The phone category is a very exciting category. We're focused on it. Whenever there is a great iconic launch, it creates excitement. In partnership with the handset vendors, we've created great experiences in the stores. So I think these are positive, and you saw that, in fact, the fact that this iconic phone launched in our fourth quarter had a material impact. So that gives you an indication of the impact in this category. Corie Barry - Best Buy Co., Inc.: Alan, to your specific question about the traffic. Alan Rifkin - BTIG LLC: Yes. Corie Barry - Best Buy Co., Inc.: Like with any launch that we see, whether it's sometimes it's gaming, sometimes it's mobile, we absolutely across our channels, I think that's what important, both online and in the stores, we absolutely can see some more peaky traffic. I think what's important to note, though, is reinforcing what Hubert said overarchingly our traffic patterns when you broaden it across a quarter haven't looked that much materially different. Alan Rifkin - BTIG LLC: Thank you both and best of luck for the holiday season. Corie Barry - Best Buy Co., Inc.: Thank you. Hubert Joly - Best Buy Co., Inc.: Thank you Alan.

We'll go next to Mike Baker with Deutsche Bank. Mike Baker - Deutsche Bank Securities, Inc.: Thank you. I wanted to focus on the long-term initiatives, the in-home services and those other initiatives. So in your long-term plan, you have about $2 billion in incremental sales roughly. Can you break down how much of that is coming from these services and initiatives and how much from product, please? Corie Barry - Best Buy Co., Inc.: Good morning. So we – and we said it at Investor Day, too. At this point, we're not breaking down specifically the long range plans from each of the initiatives. Part of that's simply being that we have many of them still very much in test mode. If you think about what we're doing in total tech support as an example, you're in 200 stores at this point and testing three different models to that plan. So it's difficult to for me to tell you on the longer tail where do we think that goes. What I would reinforce is in the places where we're starting to roll things out like In-Home Advisor, Hubert started to hit on the fact that we're excited about what we're seeing there. And in fact, we already started to increase the number of advisers we have slightly based on the demands that we're seeing. And so our hypothesis definitely was that that $2 billion would need to be supported by some of these initiatives and a combination of them likely, but we're really early in that process. Hubert Joly - Best Buy Co., Inc.: Yeah. Qualitatively – and again as soon as we can, we'll try to provide more color. But qualitatively, the direction of Best Buy 2020 is of course around growth, and it's around deeper, meaningful, stickier customer relationships and over time, building more recurring revenue streams. This is going to be a journey because you have to recognize that Best Buy is a relatively big company. So in order for these numbers to become meaningful, it's going to take time. But the direction is very exciting, and for me seeing how these new approaches resonate with customers is very encouraging. So sorry, we cannot be more precise. But hopefully, you feel the direction this is heading. Mike Baker - Deutsche Bank Securities, Inc.: Yes. And if I could follow up on that, you are adding 35 more in-home advisers. Can you talk about what are you seeing that's causing you to add that? Is it certain markets? Is there any way to break down like are certain markets working better than others? Or is it the ones that have been in place longer, they're starting to need some help? Just a little bit of color on the successes that are causing you to add those people. Hubert Joly - Best Buy Co., Inc.: Sure. So we're adding – we're moving from 300 to 375. So that's 75 additional. So it's a meaningful. It's more than 20% higher that initially planned, and we'll probably continue to add next year. So I think all of you could actually test this. We underestimated demand across the country, and so the lead time if you were to try to get an In-Home Advisor now, we wouldn't be into your home this afternoon. It would be several days. We're trying to work the lead times down. I think we're probably out a week, something like this at this point, and so we were a bit "overwhelmed" by the initial demand. And this is a case where we'll try to pace ourselves because these are highly skilled professionals. And if you rush it, if you grow too quickly then you run the risk of deteriorating quality. So while we are pleased to be adding 75 by the beginning of next year, we don't want to go overboard, so it's going to be a fine balance, but the quick answer to your question, we underestimated the demand and the days out were a bit too high, frankly. Mike Baker - Deutsche Bank Securities, Inc.: Okay. Thank you for the color. I appreciate that. Hubert Joly - Best Buy Co., Inc.: Thank you. Corie Barry - Best Buy Co., Inc.: Thank you.

We'll go next to Chris Horvers with JPMorgan. Christopher Horvers - JPMorgan Securities LLC: Thanks. Good morning. Can you talk about what you're seeing on the connected home side in terms of where are we on that adoption curve? You started to see strong results in that category about a year ago. So are we stacking comps higher in that category? And how long do you think the tail is in terms of the consumers adoption of Alexa and the In-Home Advisor, the Google platform? Hubert Joly - Best Buy Co., Inc.: Yes, Google Home. I think we're still early days. This is a significant wave, and we'll be able to measure it based on the number of devices that people have in their homes that are connected, and it's not just the voice assistance. It's all of the devices that are connected, and there was actually a survey of my home. I'll share an anecdote with you. I have 90 connected devices in my home. Now that's a bit extreme compared to the average American home, but we're in the teens probably nationwide. And so we certainly anticipate, I referenced it in my prepared remarks that during this holiday this is going to be the voice assistance in particular, but smart home more generally speaking are going to be in high demand. We think it's going to continue because what we're seeing is once people have bought, let's say, a smart camera or a smart lock, a smart device, they'll tend to then continue to add. So this is a very exciting space and we think it's still early, frankly. Christopher Horvers - JPMorgan Securities LLC: Sure. I guess, just following up on that, so from the actual voice assistant, is that sort of the primary driver of growth at this point? And any sort of differentiation in terms of the adoption of those specific devices versus the cameras and the locks and thermostats and so forth? Corie Barry - Best Buy Co., Inc.: One of the things that's been most exciting about smart home and that supports much of what Hubert said, is that within the category, depending on the quarter, we're actually seeing different aspects of the category grow. Sometimes it's been monitoring that many people are interested in, in the cameras. Definitely, voice consistently has been a big part of the growth story, but we're seeing different pieces of that within kind of the sub-categories within that, all growing at different points. So the nice part is we definitely feel like heading into holiday voice assist continues to be a very big driver both just of curiosity but also of purchases. But the good part is that surrounding that, we're also seeing the other parts of smart home grow nicely within the category. Hubert Joly - Best Buy Co., Inc.: And this whole smart home trend, of course, plays, and I'll state the obvious, plays really well to our strengths, all right? Because we are a player with online store and in-home capabilities, the ability to help customers across a wide range of devices and brands. We're really well positioned from the discovery stage then to the implementation and support stage. So a big part of Best Buy 2020 is about winning the home. Christopher Horvers - JPMorgan Securities LLC: Understood, and then the follow-up question is the International gross margin took a pretty big hit. Is that how you rolled out the total tech services? Is that something we should think about in terms of the rollout in the U.S.? Thanks very much. Corie Barry - Best Buy Co., Inc.: That's a great question. So I would not, at this point, correlate the two, because like I said, in the U.S., you're at 200 stores, but three different models that we're testing, and we're doing that so that when we're ready we can come to you with a very fulsome point of view about what we think the implications are. I mean, that being said, obviously, moving to a model that looks more like support over time where you have ratable payments over time looks quite different than what Hubert talked about earlier, which is attaching a warranty to the business on the front side. And so we've rolled out well, and the customers are adopting the product, and they're enjoying their interactions with the product in Canada. It's more a question of as you provide the support model over time, and it will look great as we get into the over time part of it. It's just that the first part is you're rolling it out, and you incur some of those expenses upfront, but you get the revenue tail over time, it causes a little bit of a different financial model in the near term, but I would not correlate that yet to the U.S. because we're very early in determining what it is that we want to do here. And once we know that, I promise you we'll be quite clear on what we think the implications are. Hubert Joly - Best Buy Co., Inc.: And what I would add is a big difference between Canada and the U.S. is that in Canada, the only version we're offering is a monthly subscription. So of course, very different than if you sell an annual subscription. In some markets in the U.S., we have monthly, but we also have annual. So I really want to reinforce the fact that what Corie said that don't extrapolate to the U.S. at this point. Christopher Horvers - JPMorgan Securities LLC: Thank you. Have a great holiday. Corie Barry - Best Buy Co., Inc.: Thank you. Hubert Joly - Best Buy Co., Inc.: Thank you.

We'll go next to Kate McShane with Citi. Kate McShane - Citigroup Global Markets, Inc.: Good morning. Thanks for taking my question. With everything being pulled forward and holiday now really starting at the beginning of November, I wondered if you could comment at all on November in terms of what you're seeing so far from the competitive environment? And is there anything markedly different than you anticipated? Corie Barry - Best Buy Co., Inc.: Good morning, Kate, and thank you for the question. Every holiday changes slightly, but every holiday is massively promotional. I think you're right in that, definitely, especially if you look at the trends over the last 5, 10 years, you can see the holiday pulling earlier and earlier, and you can see much bigger peaks on those large promotional periods like Thanksgiving week or like Christmas week. And so that's changing kind of the composition of how holiday builds. I wouldn't say there's anything that I see out there, and I think the team would support this, that we'd say is massively more promotional or massively different year-over-year. It's more how the holidays are flowing, continues to evolve over time. Again, not something unexpected. We even talked about bringing in some of our inventory a little earlier so we could support some of these earlier sales. And so it's not unexpected, but it's definitely kind of changing the composition of the holiday. Hubert Joly - Best Buy Co., Inc.: Yeah. And one conclusion, Kate, I've drawn from being here for the last several years is that nothing is over until the fat lady sings, meaning that – that's an opera reference, right, okay? No, seriously. You have to wait until the end of holiday to see what the results are because the timing varies significantly, including this year, if you remember last year there was a presidential election. And the consumer was distracted for a few days, so clearly, this year, we're seeing a different pattern. But no conclusion can be drawn until the end of that singing that I was referencing. Kate McShane - Citigroup Global Markets, Inc.: That's great. Thank you. And can you just remind us with regards to how the fulfillment to the customers is changing this year versus last? I think you had mentioned that there is a number of cities where you're going to have same-day shipping to customers, and can you just tell us what is incremental this year versus last year? Hubert Joly - Best Buy Co., Inc.: In terms of what we're offering in terms of shipping options? Kate McShane - Citigroup Global Markets, Inc.: Yeah. Hubert Joly - Best Buy Co., Inc.: So that like last year, Kate, we're offering free shipping with no minimum. So that's not a change. The change is the same-day delivery in 40 cities. That is not free. The charge varies a little bit. I think it's going to be $5.99, I believe the last time I ordered something for same-day delivery, that's what I paid. So that's – same-day delivery in 40 cities is really the new factor. Corie Barry - Best Buy Co., Inc.: I think in general, and we talk about some of the supply chain expensing included into the Q4 guide. In general, we're trying to build for speed and flexibility. So it's same day, it's next day, it's two-day, it's weekend, it's cut-off times, it's all those things that the team is continuing to invest in so that whenever customers want it, they have the flexibility to get it in the timeframe that matters to them. Kate McShane - Citigroup Global Markets, Inc.: Thank you.

We'll go next to Matt McClintock with Barclays. Matthew McClintock - Barclays Capital, Inc.: Hi, yes. Good morning, everyone. Hubert Joly - Best Buy Co., Inc.: Good morning. Matthew McClintock - Barclays Capital, Inc.: Hubert, I'd like to actually stay with the In-Home Advisor just for a second. You're hiring 75 more in-home advisers because the demand was better than you thought. I know you alluded to potentially marketing the program maybe this holiday season at some point at your Investor Day. Can you talk about how that went? I know you have a commercial out there, but did you pull back on marketing spend, because there's just been so much demand and you didn't want to maybe frustrate your consumer? Or are your marketing plans continuing exactly how you expected? Hubert Joly - Best Buy Co., Inc.: Yeah. Thank you, Matt. The plans are continuing as expected. We asked ourselves the question, the marketing team and the store team seeing the early results, reviewed things and the weight of the marketing on in-home advisers is actually relatively light. And so there was no anxiety around that. Our focus is more on operationally doing a great job, we're trying to do a great job of being responsive to customers and reducing these lead time, and so on and so forth. So that's been the approach. Matthew McClintock - Barclays Capital, Inc.: Okay. That's helpful. And then Corie, just a housekeeping question. You extended the share repurchase to $2 billion this year. Can you update us on your thoughts on the level of cash balance that you would prefer to keep on your balance sheet going forward? Corie Barry - Best Buy Co., Inc.: Yeah. A great question. And so first, I just want to make sure that I'm clear that we're not updating the $3 billion of repurchase that we set at the beginning of the year over the two years. We still are planning to achieve that amount. That being said, we've never come out and said exactly what we believe the ending cash balance is that we're seeking, but we're very clear that we're using our new capital allocation strategy to make sure that we continue to work that balance down in a really thoughtful way. We've always said and as a reminder, first, we want to reinvest in the business where we feel like we have the right investments and the right return. And so we continue to do that. But at the same point, we're obviously pacing in some of this repurchase and the dividend so that we make sure we return cash wherever possible. Matthew McClintock - Barclays Capital, Inc.: If I could follow-up on that, just theoretically, as your business model shifts more towards service or reoccurring revenue stream that Hubert outlined at the Investor Day, would that imply that you could maintain a lower cash balance than historically on the balance sheet? Corie Barry - Best Buy Co., Inc.: Yeah. I mean, I think there's a lot of things actually that work into implying that you likely can have a lower cash balance certainly than we do today. One is just the overall strength of the business and the performance, and that's what Hubert alluded to, these really strong partnerships with our vendors. Those are some of the most important things. And then obviously, over time, as you continue to beef up that stability in your business, that is absolutely what gives you more confidence to go ahead and work that cash balance down. Hubert Joly - Best Buy Co., Inc.: I do want to reiterate that the development of recurring revenue stream is something that's going to take time. So I don't want you to assume that already next year this could be a very material part of our business. It's going to take time. It's a very meaningful transformation, but it's going to take time. Matthew McClintock - Barclays Capital, Inc.: Got it. Thanks for the color. Looking forward to that though Hubert. Hubert Joly - Best Buy Co., Inc.: Great. Same here. Thank you. Corie Barry - Best Buy Co., Inc.: Thank you.

We'll go next to Simeon Gutman with Morgan Stanley. Simeon Ari Gutman - Morgan Stanley & Co. LLC: Good morning. Good quarter, guys. Hubert Joly - Best Buy Co., Inc.: Thank you. Simeon Ari Gutman - Morgan Stanley & Co. LLC: A quick question on the earlier one, conservatism maybe on the fourth quarter outlook. Any reason to think that $1,000, as people are veering towards the X that price point could eat into other sales? And then can you just remind me, if I'm buying out the phone versus taking an installment plan, is the revenue any different to you? Corie Barry - Best Buy Co., Inc.: So let me start with kind of you referenced really what the share of wallet question, and Hubert even hit on this, which is it is difficult when you have $1,000 price point phone, even a $800, a $500 price point phone. And obviously, when you're thinking about how much of your expendable income you're going to spend on CE, we are quite thoughtful about that share of wallet question, particularly over the holidays when people often go in with a budget and are trying to think about how to stretch that budget as far as they can. And so that's absolutely part of what we are thoughtful about when it comes to Q4. Then obviously, over the last two years, three years, four years, the Q4 has not played like the earlier quarters of the year. And so we're trying to take some of that knowledge we've gained into account as we think about where we believe the fourth quarter is going to go. In terms of the revenue profile, from a revenue perspective, in whatever way we sell the phone, the revenue profile is similar. The piece that looks different is depending on whether or not there's a plan attached to that and what the consumer decides to purchase alongside the hardware. That's what changes the profile, but the revenue profile is the same no matter what. Simeon Ari Gutman - Morgan Stanley & Co. LLC: Okay. And then thinking past fourth quarter and into next year, you're going to have some tough product compares next year. Do you expect the momentum generally to continue? And then will the service offering be meaningful enough next year to enable the business to continue comping, I don't know, at these current rates, but in healthy low-single digit rates? Hubert Joly - Best Buy Co., Inc.: Yes, obviously, we're not, Simeon, providing guidance for next year today. This year is going to turn out, I mean, so far this year, the growth rate have been very significant. And based on our outlook, would have been a very strong year. We provided two months ago a three-year outlook in terms of the revenue with implied revenue growth rates on a compounded basis that are below the number that we have so far this year. So we're not providing guidance for next year. But yes, carrying over these exact numbers for next year, I would not encourage you to do this at this point in time. Simeon Ari Gutman - Morgan Stanley & Co. LLC: Thank you. Hubert Joly - Best Buy Co., Inc.: Well, with this I want to conclude our call and really thank you for your continued work on our behalf, following us and sharing our excitement about where we are and where we are going. Sometimes when you look at these numbers, you have to go back a few years ago and thinking about Best Buy with the kind of comps and EPS growth we're reporting today, 4.4% comps and 30% EPS growth on top of a 51% EPS growth last year, you have to almost pinch yourself thinking about where we are compared to where we were five years ago, so very excited, which gives me the opportunity to thank again all of our associates. They are just terrific, amazing, dedicated, big heart, big soul, and great skills. And then finally, we look forward to seeing you in the stores. If you want to get that Sharp, 50-inch, 4K TV at $179.99, I would encourage you to be early in the stores on Thanksgiving at 5:00 because can you imagine that? 4K TV, $179.99, 50-inch, how cool is that? In any event, we'll see you in stores or online, and we'll talk to you next quarter. Thank you.

Ladies and gentlemen, thank you for your participation. This does conclude our call for today. You may now disconnect.