Glu Mobile's (GLUU) CEO Nick Earl on Q3 2017 Results - Earnings Call Transcript

Glu Mobile Inc. (NASDAQ:GLUU) Q3 2017 Earnings Conference Call November 1, 2017 4:30 PM ET

Executives

Bob Jones - IR

Nick Earl - President and CEO

Eric Ludwig - COO and CFO

Analysts

Doug Creutz - Cowen

Darren Aftahi - ROTH Capital Partners

Michael Graham - Canaccord

Mike Hickey - Benchmark Company

Operator

Good day, ladies and gentlemen, and welcome to the Third Quarter 2017 Glu Mobile Earnings Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the call over to. Bob Jones, Investor Relations.

Bob Jones

Thank you, Andrew. Good afternoon, everyone, and thank you for joining us on the Glu Mobile third quarter 2017 financial results conference call. On the call today are Nick Earl, President and Chief Executive Officer; and Eric Ludwig, COO and Chief Financial Officer.

During the course of this call, we will be making forward-looking statements regarding future events and the future financial performance of the company. Any forward-looking statements that we make today are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of future events. We caution you to consider the important factors that could cause actual results to differ materially from those in the forward-looking statements in the press release and during this conference call. These risk factors are described more fully in our documents filed with the SEC, specifically the most recent reports on Form 10-K and Form 10-Q.

During this call, we will present both GAAP and non-GAAP financial measures. The non-GAAP financial measures are not intended to be considered in isolation from, a substitute for or superior to our GAAP results, and we encourage investors to consider all measures before making an investment decision.

For complete information regarding our non-GAAP financial information, the most directly comparable GAAP measures and a quantitative reconciliation of those figures, please refer to the supplemental presentation accompanying today's earnings call that can be accessed via our investor website, www.glu.investors.

In order to comply with SEC guidance on the use of non-GAAP financial measures, we have changed the way we present and discuss certain non-GAAP financial measures. Specifically, we no longer adjust for the change in deferred revenue when arriving at our non-GAAP measures. However, we will provide the change in deferred revenue and deferred cost of revenue information so that investors can calculate our non-GAAP results based on the same methodology we have used in prior quarters.

Lastly, our supplemental presentation that can be accessed via our investor website has been updated to mirror the order of our prepared remarks. We encourage investors to follow along with the slides during this earnings call.

And with that, I'd now like to turn the call over to Glu's CEO, Nick Earl.

Nick Earl

Thanks, Bob. Good afternoon to everyone. On today's call, I will review highlights of the quarter and provide an update on our growth strategy. Eric will then provide a more detailed discussion of the quarter's financial performance as well as our guidance for the fourth quarter and full year 2017. Today marks my one year anniversary as CEO of Glu. I'm delighted to say that our year-to-date performance has progressed better than we expected and 2017 is shaping up to be a record year. Our strong third quarter represents a record bookings quarter and underscores the progress we've made in creating a culture of creativity, operational excellence and financial discipline in this transformative year. We posted our fifth consecutive quarter of better-than-expected top line growth, driven by strong financial contribution from Design Home, MLB TAP Sports Baseball '17 and several of our key evergreen titles. Bookings increased to $85.7 million, above the high end of our guidance of $78 million to $80 million and a 67% increase over last year's third quarter, as well as an increase over the prior quarter's booking of $82.5 million. It's worth nothing that there were new launches in the third quarter; we continue to drive the strong top line performance completely from our live portfolio. Our effective user acquisitions investments and our strategic approach live operations and our growth in evergreen titles combined with the strong bookings increase led to improved bottom line performance in the quarter and we remain on track to meet our primary financial goal of returning to Adjusted EBITDA profitability beginning in the first quarter of 2018.

I'll dive into new quarter now starting with an update on Design Home. We are continued to execute well on our plans to maximize this title's potential as we close out the year and enter 2018. Booking have increased significantly since we acquired Crowdstar a year ago we believe Design Home continues to represent a significant growth opportunity in terms of booking and adjusted EBITDA Design Home have delivered outstanding growth quarter-over-quarter, the top grossing mobile games need to continuously delivery feature set enhancement in order to grow LTV. For Design Home, these upgrades will include deepening and strengthening the meta game, providing users with the reasons to keep coming back. Another area of focus will be introducing augment and reality that will create a more in-depth and interactive experience. We also intend to customizing game to specific global geographic locations which would expand addressable market and are considering introducing e-commerce capabilities.

We look forward to sharing more on this strategy as we formalize our growth plans for 2018 because we think about Design Home's longer term potential it's clear that the game has risen beyond arranging home furnishing and is now becoming a lifestyle app that appeals to a large, engaged and loyal audience.

Moving on to our evergreen games. We are successful in Q3 in implementing our live ops strategy by updating our game with new features and content with the objective to continually reenergizing these games and lengthening their revenue tail. For example, our live ops strategy around Covet Fashion has maintained the game with the top of our list of evergreen titles in terms of bookings. Importantly, we believe Covet still has growth potential. Our creative team has done an exceptional job introducing game updates, new features and new modes of the title helping it achieve more than $9 million in bookings in the quarter.

Design Home and Covet Fashion two titles that highlight what we see as terrific opportunity in the home and fashion genres. These are large and underserved market and the area that we have been able tap into with these key titles. Elsewhere in evergreen portfolio, Kim Kardashian Hollywood which enjoys its three year anniversary in June, delivered another strong quarter with booking up sequentially as a result of new features, generating sequential growth in mature game, from mature game is another strong proof point that our evergreen live ops strategy is working.

Earlier this year I outlined three pillars of our growth strategy, that will serve as a foundation for our efforts to create strong bookings growth, sustainable adjusted EBITDA profitability and increase shareholders value over time. We pivoted from celebrity based model to a creative driven approach led by experienced and accomplished mobile game developers. We continue to innovate our evergreen title by applying live ops strategy. We also completely revamp our green light processes and instituted rapid prototyping with smaller teams, greater creativity, and blue ocean opportunities and significantly lower upfront cost.

As a result, we are making smarter investment decision driven by data analysis and beta performance before committing large dollars to a project. The third pillar is cost control, which we believe will lead to greater efficiency and operating leverages as the top line grow. We still have some work to do but we've made tremendous progress with studio consolidation and expense reduction. Over the next few months we will finalize our restructuring plan and we remain committed to entering 2018 with a clean slate and significant runway for profitable growth which we expect to occur beginning in the first quarter of 2018.

Beyond IAP revenue, we believe we have also begun to scratch the surface of what we potentially going to accomplish from an advertising perspective, we see this is a core competency in the area of business that we believe can expand from current levels. Ultimately it's a high margin revenue stream that can add incrementally to our top and bottom lines.

Overall, we feel good about the execution on our strategy to date. And believe the foundation is now in place to potentially create Top 10 grossing games and apps, stock revenue and produce repeatable bookings over the long term. As reported in our October 11 press release, the Swift Life, an app in partnership with Grammy award winning artist Taylor Swift is now in beta, checking up the first box in the process of getting the game ready for expected worldwide launch by the end of this year. For those of who haven't seen this app is an innovative and clear departure from typically celebrity games. It's fully curated social network for Taylor and her millions of fans to share updates, new content, news and stories. While it's still early in the beta testing process and the two territories represent a small sample size, we are very encouraged with the high engagement, solid early retention and nearly perfectly five star rating we've seen so far which tells us the Taylor fans like the presentation and design.

We will continue to watch look long-term engagement, retention and monetization closely as we add to the beta audiences. Once we launch worldwide we will be able determine retention and monetization for a fully scale of audience. We are just in the infancy of the potential of this app but we are very much look forward to growing into something truly meaningful, expect more detail on our next call.

We continue to anticipate three or four launches in 2018 in addition to releasing an update to our very successful MLB Tap Sports Baseball franchise in time for next year's baseball season. Our WWE title is progressing well and moving into the next phase of production with a preliminary target launch in mid- year 2018. We've decided to delay Last Day Alive until the first quarter of 2018 in order to get team more time to work on certain enhancement that we expect will maximize the game's potential.

A year ago I set a high bar for game teams to achieve in order to launch a title globally, this new approach led us to kill ultimate Chef and Car Town Racing after beta and is designed to keep us disciplined in demanding that new title hit our hurdles and achieve the quality we are looking for before we turn them live worldwide.

Looking beyond next year, we have a very active pipeline of games that are moving to our rapid prototyping and green light process. We have created an internal three year plan with a goal of delivery new games that have potential to become growth games and blockbuster hit. Our new launches will emphasis social interaction, deep data, live event and enhance content all features which will drive higher engagement and create greater opportunity to increase monetization.

We are very pleased to report that after a rigorous prototyping process we've green lit Mike Olsen's team's first game partnering with top tier entertainment brand. We are really excited to see this title make the cut in our prototyping program.

In summary, we are on track for terrific year of growth in 2017 that we believe puts us in a door step of returning Glu to consistent adjusted EBITDA profitability beginning in 2018. I'd like to share our year-to-date performance highlights which help us to get this position. First, the Crowdstar acquisition which included Design Home and Covet Fashion has outperformed tremendously thanks to quality IP combined with our investments in infrastructure optimization user acquisitions and advertising.

We generated a record 12 months trailing booking, we successfully executed in our creative strategy and green lit our first two games that aligned with our new process. We've reduced our cost and studio footprint, and streamline our central tech function, we believe we are on track with our three phases to achieve the sustained EBITDA profitability by first quarter 2018 and finally we have cultivated a creative collaborative and agile culture that is fundamental to our success.

I am proud of our team for the tremendous progress we've made; we have all made into developing a culture and operating structure those positions us for a strong future bookings growth and sustained profitability.

Now I would like to turn the call over to Eric who will provide detail on our financial results and outlook.

Eric Ludwig

Great, thank you, Nick. And good afternoon to everyone on the call. I'll first provide further detail on our strong financial results for the third quarter and then discus our guidance for the fourth quarter and full year 2017.

In February, when we review the final Q4, 2017 results, we will provide bookings and the components of adjusted EBITDA guidance for 2018. However, I'll provide forward looking margin targets to give clear understanding and framework of how we are managing our business longer term. Our strong year-to-date operating and financial performance positions us well to finish the year on high note and puts us directly on target to deliver adjusted EBITDA profitability beginning in the first quarter of 2018.

Revenue was $81.1 million for the quarter, a 58% increase over last year's third quarter with our five largest titles representing 76% of the total. Original IP titles with no royalties due continue to grow and comprise 60% of total revenue.

Bookings were $85.7 million, a 67% increase over last year's third quarter and $3.1 million increase over the second quarter of 2017. Our third quarter bookings was Glu Mobile all time record high despite launching no new titles during the third quarter. The outperformance of bookings was driven by Design Home which generated $30.2 million, a 34% increase over the prior quarter. Tap Sports Baseball 2017, was $40 million in bookings which was a 55% increase over Tap Sports Baseball 2016 third quarter last year. And outperformance by Kim Kurdistan Hollywood which increased booking 6% quarter-over-quarter.

Our evergreen titles outperformed in the quarter and contributed 43% of total bookings, 63% of total bookings came from original IP title with no royalties due. Advertising and offers were $12.4 million or 15% of total bookings which was flat from the second quarter.

On the expense side, adjusted platform commission was $22.2 million, adjusted royalties came at $6.3 million and hosting costs were $1.8 million. Total adjusted operating expenses were $56.4 million compared to $58.2 million in the prior quarter, primarily due to $1.5 million reduction in UA spend, which totaled $25.7 million in spend. We spent $15.3 million in Design Home UA costs which was slightly more than we expected given the lower CPI we saw in the third quarter. Design Home CPI costs decreased to $3.10 on a blended and CPI basis this quarter down 17% in the second quarter.

The incremental bookings increased drove improved margin flow through resulting in only a slight adjusted EBITDA loss in the quarter. We ended the third quarter with cash balance of $62.9 million compared with $68.1 million for the prior quarter. $3 million was generated from operation excluding minimum royalty payment, we spent $3.9 million in contractual obligation to licensors and we use $4.4 million in net on CapEx on a new office build on in San Francisco.

Turning to guidance. For the fourth quarter we expect bookings to increase to range of $75 million to $77 million, 31% year-over-year increase to the midpoint. This is a slight decrease from prior implied guidance of the midpoint of $79 million. The reason for this adjustments last year live .which Nick mentioned which has been pushed out of the year into Q1.

For Design Home, we are assuming growth of approximately $1 million in Q4 as compared with the third quarter partly due to expected lower UA spend in the fourth quarter. As we noted in the second quarter earnings call, CPI cost tend to increase as advertises launch holiday year end marketing campaign , given a scenario we believe that additional UA spend in Q4 would not yield us favorable ROI. We anticipate booking in the first half of 2018 for Design Home to be relatively consistent with our anticipated Q4 level. We believe that Design Home bookings will grow in second half of 2018 with the introduction of the new features that Nick discussed earlier in the call.

We will continue to apply live ops to evergreen title and we do expect to see approximately 7% quarter-to-quarter decline from evergreen tittles from Q3 to Q4. And we do anticipate Tap Sports Baseball to decline at an accelerating rate in the fourth quarter similar to prior years due to end of the MBL season after tonight's World Series game 7 BAA and the continuing shift to consumer attention to the football season.

On the expense side to the fourth quarter, adjusted platform commission are expected to be $ 19.4 million to $19.9 million. Adjusted royalties within the range of $4.7 million to $4.9 million and hosting costs within the range of $2.1 million to $2.2 million. Adjusted operating expense for the fourth quarter expected to be between $54.2 million to $54.4 million which assumes marketing to be approximately $21.9 million at the midpoint for the fourth quarter.

For the fourth quarter, we expect to be at the low single digit loss on an adjusted EBITDA basis. Doing the math from the fourth quarter guidance, our full year bookings range from $312 million to E314. 4 million representing a 46% increase at the midpoint over last year's $214 million bookings. Adjusted profit commission would be between $80.6 million and $81 million, adjusting royalties ranging from $22.8 million to $23 million, and hosting cost remains at $7.4 million to $7.5 million. And our expected operating expenses are expected to be between $214.5 million and $214.8 million which assume marketing to be approximately 28.4% our bookings for the year.

We now believe that the first two phases of our transition will be completed by the end of year, and we continue to expect Phase 3 sustained, adjusted EBITDA profitability to begin in the first quarter of 2018, and continue throughout the year. We will provide annual guidance on bookings, cost of bookings and operating expenses for 2018 on our full year 2017 call in February. On a preliminary and longer term basis, we did want to share our thoughts on our financial target that guide our financial planning process.

Over the longer term we believe that we can produce an adjusted EBITDA margin of between 15% and 20% if and we achieve booking of $500 million and we see significant further larger expense potential if and when booking scales up above and beyond $750 million threshold. To support this long-term margin goal, we've implemented a new executive compensation plan that emphasis for pay for performance culture. Corporate VPs and above have no variable cash compensation and instead having greater performance based equity, these performance stock options will be earned based on the achievement of key financial targets. We believe this compensation change better align our incentives with our investors with the overarching intent to drive shareholder value and long-term profitability.

The changes we have made over this last year, the Crowdstar acquisition, the transition to creating leaders and rapid prototyping combined with our reduced studio footprint and cost structure, we believe will allow us to reach sustained and adjusted EBITDA profitability in 2018.

I look forward to updating you on our progress next quarter.

With that I'll now open the call for questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions]

And our first question comes from the line of Doug Creutz with Cowen and Co. Your line is now open.

Doug Creutz

Yes, thanks. Just looking ahead to your pipeline for next year, you've got last year live to sports title in Dairy Free games title, I believe you guys have minority stake in Dairy Free games, is that true? And, if so, can you talk a little bit about what your economics might look like in that title if there any difference in completely internally published title? Thank you.

Eric Ludwig

Yes, Doug. This is Eric here. So actually about a year and half ago we invested $2 million in Dairy Free. We had about 19.9% shareholding stake at board spot and the ability to publish their first two titles. Over the summer, we really like what we saw and actually acquire the entire company outright. We haven't really mentioned this publicly though it is out there publicly and we are now announcing this title in the roadmap for next year. Once we get this title on beta we'll probably talk a bit more about this. But I think this really maps to our strategy as what we've done in the past with Blammo Games, our Toronto studio that we now own back before we acquired them, we've done a deal with them where we funded them, basically we are their funding partner, had the right to publish that title and as they were six months into that title of developing it on a work for hire basis, we outright bought them before the title launched and that title was started in Hollywood and we then turned then studio into our Kim Kardashian studio, our Kendall and Kylie studio and now our Swift Life studio. We are actively looking at these types of deals where we will minority stake shareholding published titles and then have an option to buy the company if certain milestones are met and we've obviously proven that most recent with Dairy Free and we will be looking at these sort of deals in the future.

Nick Earl

Yes, Doug, this is Nick. Let me just add on to WWE, a little bit. We've talked about that title in the past but this is something that title we are very excited about for a couple reasons. Firstly, it's just got an incredibly rabid fan base that's global. Secondly, it's by studio that is incredibly confident, its same studio that Tap Sports Baseball does Tap Sports Baseball and thirdly it's on the Tap Sports Baseball engine which is an engine that has really, rally deep meta game, elda game capabilities, really strong social and great monetization. So you sort of combined all these things together we feel really good about our day, we feel really good about the quality, we feel really good about the fan base. So while you never can forecast a hit in this business I think for us this is as close to a hit is possible. So we are really kind of excited for WWE in particular next year.

Doug Creutz

Okay. And then not to push you on your guidance for next year too much but you talked about EBITDA margins of 15% to 20% at $500 million. And the fact that you will be profitable, solely profitable in your existing book of business for next year. Is it fair to impute then around $300 million going forward is a level of which you guys can do breakeven.

Eric Ludwig

Yes, it's pretty close, yes.

Operator

And your next question comes from the line of Darren Aftahi with ROTH Capital Partners. Your line is now open.

Darren Aftahi

Hey, guys, thanks for taking my questions. Just a few if I may. Nick can you just kind of expand a little bit more on the AR feature in Design Home and just I think Amazon today launched that feature on their app in generally, you've seen that I think

Shopify's powering Magnolia, you see with IKEA but I am just sort of curious how you are planning to kind of differentiate that? I know those are unique brand in that regard but just little more color on that and then just on Design Home, what is the advertising contribution in the quarter and how does that change quarter-to-quarter. And then Eric if you don't mind repeating your commentary about you kind of guided 2018 bookings for Design Home vis-à-vis 2017. I think you made some comments. I didn't quite catch all that. That will be helpful. Thank you.

Nick Earl

Great. Hi, Darren, okay, yes I'll kick off with talk about AR on Design Home and then Eric can actually take the next two questions. So it's really early for us to talk details, augmented reality for Design Home but we pretty early recognized that there was a great opportunity especially now that we are seeing capabilities on the phones and in the operating systems that just really lend itself so well to this feature. We imagine we can do things like walk-into your house and use Design Home to take a look at your room and maybe move furniture around. We are not going to commit to anything at this point because it's just way too early and we are just still testing this out. We just think it's just a perfect marriage of that technology with this fan base, this player base and this lifestyle app. So it's still pretty early, it's just feels like natural fed, and further more I would say that the game or the lifestyle app Design Home has accomplished what it is accomplished doing live operations for the most part. We are excited about this next opportunity of adding a new feature set enhancement such as they are in other things I mentioned that we think can potentially drive LTV and revenue for installed app and really that's what is going to be our focus for the next 12 months both live apps and the additional features.

Eric Ludwig

Yes, and Doug in terms of advertising revenue, I don't know numbers exactly but Design Home in Q3 did little bit under 10%, I think it was like 9.8% or 9.9% of that ad revenue in the quarter and it's pretty flat from the second quarter. And then in terms of what I said booking wise for Design Home in 2018, what I said there was -- yes, so for 2018 we anticipate bookings in the first half of 2018 for Design Home to be relatively consistent with our anticipate in Q4 of this year level so roughly $31 million and then we believe the Design Home bookings will grow in the second half of 2018 with the introduction of new features that Nick discussed earlier in the call.

Operator

And our next question comes from the line of Michael Graham with Canaccord. Your line is now open.

Michael Graham

Hey, thanks a lot. Just a couple. One is just trends in user acquisitions, just wondering what are you seeing there in terms of like how are you spending money, where, what sorts of outlets? And I am wondering if you could remind us just sort of what are the guide rate you think about in terms of ROI or how you think about what's the right level to spend on game, payback period and how long it is and then just a second question if you could just remind us or give us any thoughts on how the new iPhone cycle might impact your business in the fourth quarter, if at all?

Eric Ludwig

Great, thanks Michael. I'll take the first two questions. I'll turn it over to Nick on the iPhone action what not. So in terms of UA spent, we've historically seen kind of an overall up into right trend on UA CPI, over the last year we've spent in most given quarters about 50-ish percent, some quarters more, some quarters less on the Facebook entire network, the Facebook itself et cetera. Some quarters more, some quarters less kind of about half of our spent is on Facebook. We have seen things like MoPub and other channels like that, that are trending up, and some other channels have been turning down. We are constantly rotating in and out better performing and worse performing platform partners in terms of UA. So that's kind of that point. And then in terms of this last quarter for example, I mentioned we did see Design Home CPI go down in the third quarter and this is as we open up more geographies and more new channels, we saw a lower blended overall paid CPI. We do anticipate that going up as we typically always do in the fourth quarter so there is some dynamics of overall into the right on a year-over-year basis. But within the year that can go from lower to higher around the fourth quarter.

Nick Earl

Yes, hi, Michael. In terms of iPhone and a next chapter hear nothing but good things hearing that iPhone 10 is in significant demand, it can be even delaying some of the shipments in order to account for that. With that said, we are not really assuming that that's going to change our business. We are not building into that our forecast. If it's definitely kind of explode the installed base and that has an effect on the revenue profit for the company wonderful but we are just not counting on that.

Operator

Our next question comes from the line of Mike Hickey with Benchmark. Your line is now open.

Mike Hickey

Hey, Nick, Eric. Cognates on the quarter. Curious on the Swift Life beta, you sounded somewhat optimistic Nick, it's really hard to at least from RC get a read on the data but maybe you can give a little bit more details on your optimism for this game and perhaps a little bit more on the business model.

Nick Earl

Sure, absolutely. Yes, you are right, you are picking up some ambivalence here that's only because this is a new game and it is just so early on and the beta process we have two very small territories. We don't really Taylor working in it in the way that we expect her to. And believe that's going to really drive engagement, it's going to really drive the energy level of the whole community here. So that is what you are picking up on. With that said, yes, we are seeing some really nice numbers right now. It's just so early and it's not on the scale of audience. We see great engagement in terms of how often players go into the game, how many times a day, so engagement is really strong, we are seeing terrific ratings, we were close to five stars in both territories and that is certainly something we are incredibly pleased with. We are going to see strong monetization. But I just caution the community to sort of think about how early it is and how small the user base currently is. So that's why we are saying we are just going to watch really closely and once we do launch and which should be later this year and we've got Taylor sort of full attention in terms of being involved and part of the community. So anything could happen when we scale up. So incredibly early but we are sort of cautiously optimistic as they say. In terms of the business model, we are sort of earliest or earlier stance was there was really going to be sort of driven mostly by ad. With that said, we are actually seeing some nice in app purchase revenue so we just have to sit and see how that plays out as we scale for the next territories and get through the Canada and then open up live and who knows I mean this maybe going to be stronger in in-app purchases than advertising and that would be something that we would absolutely love. But we are going to have wait and see how that goes.

Mike Hickey

Okay, good. Occasionally I see like big spike in growth from the game from the beta, what are people buying?

Nick Earl

Yes, so there are different things you can buy in the game. There is music and sort of the whole Taymoji currency, so there is lots of -- not a lot -- there is a reasonable amount of things that you can buy in the game and like I said it's driven by ads as well. But you have to think of this not as a game, and think of it more as a social network that has kind of gamified core loops and as we build it out further and as we add more audience to it, more that will come to live.

Mike Hickey

You said you are getting five stars on it, I saw that. Why are people ranking it so high given Taylor doesn't seemed to be that involved at the moment?

Nick Earl

Yes, I mean that's a good question. We wonder that ourselves because with Taylor not- -she has posted a couple of times and that's really kind of spike engagement and excitement but I think what people are responding to, one that is not sort of typical celebrity game that I think probably [Technical Difficulty] many users were [Technical Difficulty]

Operator

And I am showing no further questions at this time. So with that said I'd like to turn the conference back over to CEO, Mr. Nick Earl for closing remarks.

Nick Earl

I don't know if you are -- maybe you are not hearing us but we were mid -- [Technical Difficulty]

Operator

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program. And you may all disconnect. Everyone have a wonderful day.