Global Payments (NYSE:GPN)
Citi Financial Technology Conference
November 7, 2012 10:40 AM ET
Jeff Sloan - President
Hello (inaudible) I’m a Member of the Computer Services Research Team here at Citi. We’re very pleased to have Jeff Sloan, President of Global Payments. Jeff is going to go through a presentation, short presentation about 10-15 minutes and then we’re going to open it up to Q&A. So Jeff, thank you very much.
Thanks Will and thanks to Citi for having us here today. I’m also with Jane Elliott and Kay Sharpton also from Global Payments. I’m really going to cover three topics today in brief and then take questions. First is what is Global Payments today and how did we get where we are.
Second I will talk a bit about the market in a bit about then our strategy. But just to back up and get everyone on the same page. When we think about what our position and our strategy is for Global Payments it really has three elements to it. The first is we have a worldwide acquiring platform that enables processing of any transaction on any device at any time and that’s a core part of what we do and we will talk more about this as we go through it.
Second, we have multiple avenues of distribution today. For our products we have direct distribution which I will also talk about and we also are a partner of choice for wholesaling our business and I will talk more about that too. And then lastly we think we are very well positioned and very attractive end markets.
We will talk a little bit about our most recent deal with HSBC and the attractiveness of India and Mainland China in particular. Just to start with a snapshot of global payments today. On the left hand side of this page, we have roughly a 70-30 split today of net revenue between North America which for us of course is U.S. and Canada. And we will be calling international for the rest of the world. Our business in Brazil today is a startup that’s also included in North America.
On the right hand side of the page, just to give you a sense of size. We are one of the four largest processors, acquirers worldwide. We are physically present in over two dozen countries around the globe and we process roughly a third of a trillion dollars of volume per year again around the world.
In terms of our go to market strategy, globally there are really three elements to what we do and I touched them initially. The first is to expand the scope of our distribution. If you think about what we do we have a distribution end point largely to our merchants, banks or other partners. We have a technology platform that is then customized by geography. So our first strategy is to go to market through distinctive means of distribution that means two things first direct distribution. We have a roughly 1000 sales people today around the world who are W2 employees and who have quota and are directly producing today globally.
Second is our partner of choice model, where we are effectively a wholesaler and in that business we have bank partners, we have VAR partners and I will talk more about APT additionally in the presentation. We have ISO partners mainly here in the United States and we have got partners in areas like e-Commerce and Card-Not-Present like CyberSource and Visa.
And interestingly that model is changing a bit which is something I will also talk about as it relates to our mobile strategy. The ability to provide solutions to companies like O2 which is a telecommunications company that we announced a few weeks ago. We had entered new partnership with Europe. The ability to actually distribute through mobile technology using what we call here a payment service provider or aggregation model. We’re providing wholesaling services to someone like O2 and then they are reselling those services through mobile technology into their consumer and customer base in United Kingdom. I think it's a new line of business for us and that’s why it's broken out separately here in terms of distribution.
What this means is if you walk into a O2 store in the United Kingdom and you’re a carpenter or a plumber or a painter and alike and get a phone from O2 that will come with an EMV compliant dongle that you can then use to process transactions and we’re wholesaling that infrastructure to O2 today. We announced a similar deal with Yell which is now called Hibu and there is more on that to come but that’s another distinctive element of distribution and I think that you will see more of from us going forward.
Our second initiative is to grow our geographic footprint. We have expanded our business in the last couple of years in Europe through a partnership for example with La Caixa in Spain.
We have expanded our business in Asia-Pacific, most recently through our agreements to repurchase a 44% minority interest from HSBC and expand our business beyond HSBC there is a very good partner of ours into other regions in Asia-Pacific including in particular India and Mainland China and lastly I touched on our expansion into Latin and South-America especially in Brazil.
And lastly we needed to deliver enhanced value to our customers you may have seen our announcement with PayPal and Discover to allow PayPal transactions to be through our partnership with Discover that is part of the type of value I think we bring to our merchant base and enabling acceptance of any transaction at any time on any device. We also need to capitalize additionally on incremental multi-national transactions. So if you go to what I talked about before with O2 that is just the first part and I expect to be a multi-national relationship with people just like that so our ability to service those transactions out of our service center in Manila and in the Philippines and to provide that kind of functionality in whatever market a large corporate partner wants to go into at any time and seamlessly I think is very distinctive to us.
Just a quick scorecard in terms of how we have done as a public company from our spin from National Data Corp in 2001. You all can read these numbers but we are generally up 7 to 8 times over that period depending on the metric that you’re looking at this page and that includes environments like the tech crash in 2001 obviously 9/11 and the recession of 2008 so we feel very good about our performance as a public company.
In terms of the breadth of our distribution I talked before about being a worldwide business. In general what we are one, two or three by way of market share in each international market that we are in and you can see the detail on this slide. This also I think supports the concept that we are the partner of choice for complicated financial institutions and complicated corporate customers wherever they are in the world and here is the geographic evidence of that.
As I mentioned before we are proud of our results as a public company. This is a last few years coupled with the size of the company at the time of spin in fiscal 2001 in terms of performance and you can see a 17% comp and annual growth rate and net revenues over that period and a 27% comp and annual growth rate in cash earnings per share.
So let’s talk for a minute about market trends. I think most of the people in this room probably don’t need to tell them if this is an attractive market and you can see the five trends listed on this page. I just wanted to highlight a few of the multiple levers that we look at for growth. In general our benchmark in any given market is Visa and MasterCard transaction growth. We should be growing and Visa and MasterCard transaction unit growth or better and generally better in every market that we’re not in.
It's important to drill down and figure out exactly in a given market what industries that we participated and where we chose to play but in general that is our target. Number two, as I mentioned before I think we’re a very good partner of choice in many of our markets. That means with very few exceptions we should find someone to partner with. We have been going to a new, into a new region. Brazil is actually an exception because of the way the market has developed in Brazil. Overtime but our partnership with La Caixa in Spain is a very good example of finding the right partnership when we go into new markets. Next new payment types and technologies, at the end of the day our value proposition to our customers is to enable them to accept ubiquity of payments, any device any time any location that means PayPal in our most recent announcement that means any kind of device from a wallet point of view as it relates to NFC where merchants value and our relationship is the ability to help them facilitate commerce. It shouldn’t matter to us how it's coming in or what scheme is providing it, instead it matters that we can facilitate that transaction and in general complexity is a good thing for our business and more complicated something is, the more value added we can provide and the more we can generally charge for given transaction types.
And the last point in terms of integrated solutions I think is also a very important. We will come to APT and the acquisition in a minute but in general our thesis is that the world is getting more complicated rather than less, our ability to integrate into multiple providers of software that provide enterprise resource packages into dental offices, into veterinary offices, into retailers, restaurants, automotive repair shops. Our ability to integrate into that functionality and ultimately make to ensure that its EMV compliant is a core go to market strategy and what we are trying to do and it's very difficult to disintermediate or too commoditized.
I think everybody in the room is probably seen this up into the right chart that’s listed on this page. I think that two things to note are the relative size of the U.S. bar and how big that bar remains even by way of forecast in 2015. So all the rate of growth in the U.S. business is obviously slower than that of the international business. There is still a very big chunk of the world’s economy as forecasted here in 2015.
The other thing I want to mention is the size of the Asia-Pacific bar listed here in 2015, a key thesis of ours in buying out the joint venture and the 44% interest that are partner HSBC had and in a joint venture is that Asia is going to become a bigger part of the world’s economy and of the transaction volume globally over what’s now the next three to five years on this slide and I will talk more about that when I talk about the transaction.
So there is a number of changes in our market that I think are really going to drive our growth at a macro level and we are going to the detail in a minute. The first is the adoption of the United States market of EMV whether it's chip and signature or chip and pin.
And as many of you in the room know that it's coming at least in the first stage by April 1 of 2013 for the networks of the United States. EMV is very good news for our business and the reason it's good news for our business is that we have experienced around the world in EMV adoption so we just put in place EMV in Canada over the last two years is a core skillset of ours to make our customer base EMV compliant and I think provides as well on the integrated software side a barrier to entry to make the integrated software products that we have EMV capable.
So while the first touch point for EMV is in April and the ultimate liability shift is not until October. We are very well positioned and we expect to capture share out of the EMV implementation. The next slide I think we are benefiting from is network evolution. So as I mentioned before about aggregation and payment service providers on the networks in the last 12 months Visa MasterCard in particular have substantially loosened their requirements around aggregation and payment service providers. Today we have a very large aggregation business in Europe and here in the United States we have our own subsidiaries called Greater Giving which is a not for profit VAR subsidiary of ours that we have owned for a number of years. But our ability to enable new customers to adopt mobile technology think about my O2 example at the beginning of the presentation is going to be likely done on an aggregator basis.
But we’re not going to underwrite O2s end customer we are really underwriting O2 and the ability to do that to the chain is in the network rules. Given our familiarity with that business model here in the United States as well as in Europe is a core asset of ours.
When I first raised the aggregation model for example with one of our colleagues in Canada the first question he asked me was what’s an aggregator? So if our own people don’t know in Canada what an aggregator is I know we’re are early on in the market and I think that’s the highlights the ability of our worldwide business to actually spur adoption.
The third is social culture trends; you’re (inaudible) mobile to figure out where the world is going there. We’re in the market today not just with O2 in Europe but with service providers here in the United States who are paring that mobile technology.
At the end of the day it doesn’t really matter to us what that mobile technology looks like. What matters is that we capture the processing, captures much of the economics as we can. So I view our business very similar to that of an arms manufacturer as long as someone is producing we’re going to do fine especially in businesses with incipient growth.
Next element is digital commerce that also includes social media and the internet. We announced our transaction with CyberSource which closed on February 1st of this year of 2012. We are very pleased with that transaction is gone. We bought our portfolio I believe roughly 9000 Card-Not-Present pricing customers here in the United States and also came with a referral relationship with Visa for additional Card-Not-Present volume. That relationship is done very well and exceeded our expectations since February. Let me close the transaction and I think Visa is a partner who drive our e-commerce business is generally a very good thing.
Not just in the United States but also around the world and then lastly from the multi-national point of view. Not only do I believe that we have a very expansive multinational footprint as I mentioned before, we have a presence in 26 countries and the ability to authorize and settle in 50 currencies today but our service center in Manila actually handles much of our volume around the world. We handle 95% of our voice authorizations today out of Manila for the United States. So it's a relatively seamless infrastructure 24/7, it's very helpful for us to have 500 employees in Asia in the Philippines providing service but it also means when new customers come to us and ask us to switch on mobile in any jurisdiction that they are in we can do all that out of Manila from a service center with a very competitive cost differentiation advantage and it also to mean I’m very quickly and seamlessly in the same systems that we use here in the United States.
Let’s talk a little bit more about strategy. So there are really five elements that we are managing toward in our business and I will talk about each one of these in more detail but these all support the three points that I laid out upfront. Worldwide acquiring footprint, second multiple avenues of distribution both direct as well as partnering of choice and third we are present physically and attractive end markets.
So first let’s talk about our Americas business. There are really two elements to what we are doing in the United States in Canada; the first is to continue our direct distribution channel. So one of the core strategies I have when I came in Global Payments was to build out direct distribution in the United States. I will talk more about APT in a moment but APT really puts us on the right footing to build out direct distribution. While nothing is impossible you will be very surprised if we did another transaction with an ISO or another service provider here in the United States for distribution reasons. I think APT really got us to where we need to be and I will spend a minute on that in a few moments. The second thing we need to do is expand our partner of choice model where a very good wholesaler in what we do. Part of that as our existing ISO business and part of that its listed here is our e-commerce business with CyberSource and Visa.
I also mentioned before our ability to roll out additional aggregation models and payment service provider models in multiple geographies. We do that already in the United States through our wholesaling and we will be doing more of that with corporates that will come down the pipe.
The second thing that we need to do is introduce additional product and service offerings. One of the things that’s nice about being a multinational corporation is to take things that work. In one geography outside of the United States and bring them somewhere else. So for example we have announced that we are rolling out dynamic currency conversion into the United States. We have already rolled it out in Canada and that roll out as we described in our September call is exceeding our expectations and the reason we were able to do that is that we rolled it out first in Asia a number of years ago and we were very happy with how the roll out did in Asia. So here we took a product that we have in Asia. We brought it to Canada and now we are bringing it to the United States.
By the way we also brought that into Spain and it's a meaningful piece of our La Caixa joint ventures growth and profit this year.
Second thing we need to focus on is emerging payments, I have already talked about PayPal but to enable any type of purchase at the point of sale regardless of the source is a key value proposition of ours and then lastly I already talked about geographic expansion and what we are doing in Brazil. We hope to add to that to other parts of Latin America. We were in Mexico and other parts of Latin America when we owned a money transfer business which we sold a few years ago. We need to get back to that market that really is a last market of size by way of scope that we are not physically present in today. I’m talking about Mexico, Colombia, Chile and Argentina principally. Brazil I think you already know about.
So let me spend a minute talking about APT and our Americas business and why we announced and closed that transaction in October this year. That transaction came with about 700 VAR partners the biggest verticals that they were focused on were dental, veterinary, healthcare, pharmacy, auto repair, retail, restaurant, saloon, dry cleaner that kind of thing. The purchase price was just about $400 million and as I mentioned closed a few weeks ago. There were really a handful reasons why we thought this was the right transaction to do.
The first was to control more of our end points of distribution. As we announced in the press release most of the 8 million of dollar volume that came with APT was on a blended basis that means it was not cost plus but instead it was quoted on a spread basis. It's important for us to own more of the value chain of this services that we are providing to our merchant customers. So in our wholesaling model we are generally cost plus and number of pennies per transaction but as volumes go up and as tickets go up we benefit by more transaction volume but not by dollar volume. The inverse is the case with APT, in the case of APT and also in the case of CyberSource by the way we benefit from increases in volume and increases in spread and increases in ticket.
So the ability to better control pricing and have more firm control over distribution end points is a core part of what we want to do, if you like what we do now will like more of it better. The second thing is strong retention profile; integrated solutions have very low attrition. So APT had what I consider to be very low attrition and very high retention for fast growing payments, businesses that we have experienced with.
The third piece I already touched on expand vertical markets that came with over 30 vertical markets that are active today, the most significant of which is only 25% penetrated. So plenty of avenues for growth at APT and for integrated solutions and lastly strong financial performance and trajectory. This is a business that was growing well north of our organic rate of revenue growth, had a much better margin than ours did and therefore much better EBITDA and cash EBIT growth than we were experiencing on our own.
And now is all on the context of the U.S. business. I will be very disappointed if a few years from now we didn’t look back and expand this business meaningfully not just at the United States and beat those numbers but actually expand it around the world including in particular in Canada, Europe and Asia with a VAR business is just incipient and remember we’re already in those markets today with a 1000 sales people. If we can’t take those guys and partner with this technology then we’re really missing something.
Accelerate growth internationally; this is very similar to the U.S. business. I mentioned before in the third ball point in the left payment service providers with O2 and Yell now called Hibu, there are more coming there. I talked just a minute ago about the VAR channel, and new partnerships. I do want to talk about additional products in those regions. I mentioned Spain who has now brought DCC from Asia into the Spanish market, we’re doing very well with it and we’re doing the same thing with IPP or installment payment plans.
So paying by installments is common in Asia, it's common in Spain, we took the same technology that we had in Asia and brought it over to Spain and we are selling that today in the Spanish market. That is not something that La Caixa would have done but for our partnership.
And then lastly on geographic expansion, we need to find additional geographies to expand our business in. We’re generally not in contact to Europe directly and by that I mean Germany, France and Italy we are there at Card-Not-Present basis. So we do look proactively for expansion opportunities in those markets. We also through our partnerships with people like La Caixa have the ability to acquire more growth in market. La Caixa is purchasing a number of fail banks in Spain with government assistance, they are the good bank and these failed banks are debt banks (ph).
Those merchant portfolios then become referred to us as a right of first refusal and we have the ability to expand our market channel in Spain through our existing partnership which is also a good thing.
Let me talk a minute about HSBC and the agreement that we announced in July to buying the 44% of the joint venture that we didn’t currently own. As we said publically this is going to close in the second our fiscal second quarter of 2013. HSBC has been a terrific partner of ours around the world including in Asia. This will extend our partnership with HSBC into the early 2020s form a referral point of view but importantly with a removal of the 44% interest we can now approach markets like India and Mainland China that by the way of contract and also from a regulatory and business point of view we could not expand in because we were affiliated with a third party HSBC.
So HSBC has about 45 branches in India that is the cap in India for growth of a non-Indian financial institution. We have a great partnership with them in India but we did not have the ability for example to go beyond those 45 branches with anybody else either contractually or is it business matter. This will remove that restriction. Importantly those referrals from HSBC will remain exclusive to us through 2021 I believe.
From a technology point of view I mentioned before that we want to approach the market multi-nationally with uniform front ends and back ends so unlike many of the businesses that you may see that are global we are really on a common backend around the world. So we have a settlement system by large in all the markets that we are in. We’re down to two or three front ends depending on the market that you’re in, and the timing which actually is a low number given where we have come through in the industry. Ultimately the value proposition to the customer is integrate with us once anywhere and your other markets around the world between this and our Philippine center that you would like to be in.
I think that’s particularly important in the context of what we are trying to accomplish in the mobile landscape. Lastly in terms of acquisitions going forward, acquisitions have been a big part of our growth historically. We have spent a lot of time and I do as well on our pipeline. You can see what our criteria are broken down by geography. I think it's in the U.S., I don’t see us doing additional ISO transactions beyond APT. We are opportunistic but that’s all about vertical markets for us and newer technologies in the rest of the world listed here those are all market expansion opportunities.
So it's finding the right partner in the right geographic region or it's getting bigger with our partnership with La Caixa where we already have a meaningful presence.
Lastly from a product point of view, our perspective to approaching our partnerships is very similar to providing a base lever of functionality which you can see in the middle here and allowing other people to plug and play into us.
So before we bought APT we released a number of developer portals where people can code into our systems and we will certify them in our gateway. APT was doing the same thing from a VAR point of view. This is very similar of course to what Apple is doing with iTunes and what Google does and alike. Our job is to provide innovation for what we are doing but also to provide a common set of footprints what are our customers are using us to do around the world. Innovation is something that they need to do as well. We are not going to have every good idea and they should be able to plug and play into us. So this was a core part of our thesis before we bought APT and I would say a logical extension of our product strategy.
And then lastly I think we have already touched on this but we really are very performance focused and focused on growth. You can read this for yourselves but I think our performance since the spin 11.5 years ago at this point highlights many of the things in this page and I do think we have a very distinctive go to market approach both with our own direct distribution as well as with our partnerships around the world. That’s it.
We have a few minutes for questions I’m just going to kick it off one and open it up for the audience and then I have follow-ups. So first and you addressed this a bit with the O2 announcement and with the announcement with PayPal but just wanted to get your view on new entrance non-traditional entrance into the industry Square comes to mind, PayPal and understanding that merchant acquiring has always been an incredibly competitive industry. Are you seeing incremental competition particular at small and small, medium size from these players? Is it a blip on the radar screen?
No I don’t think it's a blip, I think that the businesses you said well has always been extremely competitive and I don’t expect I have to change, I only expect it to be more competitive. What I would say though is when I look at new pay types like PayPal and when I look at new entrance like Square that is really an opportunity for us. So as I mentioned in the presentation one thing they were very good at is wholesaling our infrastructure. We have a long established history here in the United States and now around the world to things like O2, Yell and others have actually renting our facilities and growing with our partners and we have been very fortunate to be able to do that.
So when I look at Square or Group on and alike those are very sophisticated customers but they are ISOs versus looking to provide complete functionality from an acquiring point of view. So ISO is a business that we are good at. We also have the competitive advantage of been able to provide that around the world in any market that they may choose, any device, anytime, anywhere and I think that’s an area we do very well especially out of our center in the Philippines. So I look at that and think about our ability to help them grow in the United States and outside of it.
And I also think about our ability to add more corporate ISOs to what we do like O2 and allow them to wholesale our infrastructure as well.
Okay great. One more question from me, the Canada business has been a bit of a challenge for Global Payments for the last couple of quarters as a result of some pricing actions or some slight compression. If you can just give us maybe a little bit of background on what’s going on there and then any sort of outlook that you can give us in terms of where that’s going?
Sure so I think we are in a happy place today with where the Canada business is trending. Our job as we talked in our July call and September is to make sure it's not a head wind or if it's a head wind a modest head wind this fiscal year for our Americas business and that’s what we are executing on. We hit our income contribution numbers for the first quarter and just to map the rest of the year is progressive improvement. As it plays out the way David described in the call.
Canada is principally an issue related to spread diminution around the small to mid-size segment. If you look at our transaction growth well we have actually had very good meaning better than Visa, MasterCard interact by unit growth which again looking back at what I said is how we measure progress in our business. So I believe that we have been capturing share in Canada. The problem is it's been coming at more reduced spreads. So we have a legacy book at a higher rate of spread than we were selling new accounts. Those will not converge overtime but these (inaudible) book will migrate and our job is to manage transaction growth relative to spread diminution and by introducing new products like DCC which I talked about by reducing attrition and we have seen attrition come down in Canada through analytics that we put in place in that market and we have very attractive attrition low attrition, high retention through additional sales efforts.
We are actually performing as I mentioned quite nicely and then through selected price actions and cost reductions to manage it so it doesn’t appeal the rest of the growth of the Americas and I think you will see improvement as guidance applies throughout the rest of fiscal ’13.
The other thing I would say I do feel like recent announcements from one of the networks about pricing actions in Canada in the spring of 2013 will help our business. We have been kind of out there in island with visible movements over the last number of years without any actions by others, more generally it's part of a macroeconomic environment with what’s going on in economy in Canada.
So this is only going to help us, it's not reflected in our guidance, it's upside to what we are doing. So when I look at where we need to be in that business and where we are today, I actually feel pretty good about the trend.
It's great, maybe I can open it up to see if there are any questions.
Can you just spend a little a little bit of time talking about that selling process in China, and India? Is that a missionary sale, do you have to convince them of the business model of a referral relationship or are they already in payments to some extent and this is you know not a 6 to 12 month education process which have to go through?
It does of course vary by market; I would say that in India there already is a more robust referral environment in that market from financial institutions. So I don’t think that’s a long a tail as you might otherwise think in India. So from a pure referral point of view we are making progress in that market and I expect to make more. I would say in any market doing a more formal joint venture is a fairly lengthy undertaking because that really is a development like transaction that can be complicated once you get into various cost elements but I would say in India I felt pretty good. Our ability to generate additional referrals.
I think in the case of Mainland China we have a great partner really in CUP and in HSBC in China I think though that in China just given where that economy is and the stage development of cards in China that’s probably going to take a little more time and be a little bit more missionary work in those markets. Many of those markets are lesser developed in terms of the state of evolution. Obviously CPU denominated transactions in China are big part of the market.
Now the happy news there is that we are the only non-Chinese company who can acquire CUP denominated transactions in China, in Mainland China.
So I feel like we’re well positioned there but in China approvals to enter new regions are largely by region so the kind of region by region and unless we find a bank partner in that region then we have to see that market with new sales people. We don’t have an existing book and that can be a longer undertaking. So I think both are very good opportunities for us. I think the opportunities in India are marginally in near term for the reason I mentioned. But these are things that we are both focused on but I can’t control is when the banks decided to do something. So it's important to have multiple irons in the fire and so whatever hits, hits when it does and that’s the part that’s hard for me to control but I think we are making progress is both markets and that’s how we think about.
In your comments about the O2 transaction you made a point of saying you underwrote O2 but not their customers. I was just interested if you would elaborate on that and second question is you work with skew data on the transactions that you process, how do you use skew data for the benefit of your merchant customers?
So on the first part of what you said we always do underwrite just to be clear in the context of AML and KYC, so from a regulatory point of view we are always reviewing what our partners do to make sure that we are all doing the right thing on AML and KYC especially in the context of mobile which is really kind of instant decisioning. So it's important to get that right and I do think that’s a good functionality and an important functionality that we provide. What I meant there is ultimately from a credit risk point of view which is my comment about underwriting. From a credit risk point of view it's a different quantitative and qualitative assessment about the viability of someone like O2 for a large corporate for that matter then it is about Jane or Kay (ph) as a separate consumer coming into an O2 store who wants to take out a phone and a dongle as part of their service as been a carpenter or painter in that kind of thing.
So we’re monitoring that to make sure that we are doing whatever makes sense from a AML and KYC point of view but the credit has enhanced obviously very considerably by relying on the balance sheet and the market cap of O2. That’s no different than what we do to lot of our tech customers today around the world which is just a corporate matter rather than necessarily a discreet underwriting an individual’s credit if it's been provided at the corporate level.
Essentially what I meant rather than to parse underwriting rather than to comment all about the regulatory which we have to do in any case. On your second comment I don’t think we provided a lot of skew level detail today to be candidate. We are really not – people talk about big data and the information services element of what we do I think you can see a lot of that in royalty and couponing and alike but as a general matter I don’t think we really mind or keep or feedback a lot of that data to our customers today. That maybe a state that we evolve too ultimately, I don’t think we particularly a reason industry (ph) do a particularly good job of that and that’s why I think some of the larger retailers who do that have a competitive advantage perhaps. But I don’t see us doing a lot of that today and I think in an immediate term probably won't be doing a lot of that at the skew level.
We’re out of time, actually we are over time. So I want to thank Jeff. I appreciate it.
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