Earnings Call: Q4 2017

Feb 6, 2018

Good afternoon, and welcome to our conference call during which we will discuss our operational highlights and financial results with the fourth quarter full year 2017. With me today are Harold Holdain, our CEO and Taco Piccolar, Hontom's CFO. You can also listen As usual, I would like to point out that Safe Harbor applies. We will start today's call with Harold who will discuss the key operational developments followed by a more detailed look at the financial results from Taco. We will then take your questions and with that, Harold, I would like to hand it over to you. Yes, thank you very much, Bruno, and welcome ladies and gentlemen. Thank you for joining us today. Delivered on our updated 2017 guidance with total revenue of 1,000,000 adjusted earnings per share grew by 16% year on year. Our business is clearly shifting to a high gross margin business with long term contracts better predictability and more upfront cash flow. Over 60 percent of our revenue mix is now derived from data, software and services which is now contributing 83 percent of our total gross profit. Taco will provide further information on the financial highlights an essential outlook for 2018 later during his presentation. Our connected car products continue to do well and the order intake for 2017 exceeded EUR 400,000,000 and that is a new record for our automotive business. We significantly improved our position in the North American market with important contract wins. We also announced number of new product introductions during 2017, with PSA latest car lines, Maps for Daimler in North America and the full navigation stack for Alfa Romeo and Alfa Romeo's new SUV Distelvio. Also, during 2017, we acquired autonomous Berlin startup that brought us critical expertise in automated driving systems and smart camera technology that will form the basis for high volume low cost data acquisition to build and maintain HD maps. At CES 2018, we launched Auto Stream, a new real time map delivery system that enables vehicles to build a virtual horizon for the road ahead by streaming map content that can be Form and Autostream to produce and distribute HD Maps for ultimate driving applications in China. Oto stream will be accessible for developers as part of Baidu's Apollo open source project for self driving cars in and outside of China. Moving on to Enterprise. At the end of 2017, we announced that our online APIs integrated in the newly launched Microsoft Azure cloud platform. By offering our location technology on Azure, we have access to a broad range of enterprises and developers who can use our APIs to power a variety of applications, including IoT and Smart City applications. We've also repositioned our own developer portal for online APIs during the quarter, the product offerings and priding are now geared towards developers' Small and medium sized businesses. We also announced new collaborations and contracts with Sony, TripAdvisor, Michelin Mappy, during this year. Our telematics business surpassed 809,000 scribers by the end of the year, and this represents a 16% increase year on year. During 2017, telematics was recognized as Europe's largest provider of fleet management solutions and a market research firm, Birk Insights. This is his 3rd year we've been running that we have led to the European market. In the Connected Car Service segment, we announced a contract with lease plan This is an important partnership. We are bringing Connected Car Services into the mainstream and are using Connected Car Technology to serve as a broader range of stakeholders, including drivers, insurance providers, car maintenance companies and more. Moving to the next slide, I give you a short update on the strategic priorities. We will continue to In Connected Cars, we aim to grow through technology leadership in real time mapmaking, traffic services, application software in the right range of location technologies. We will continue to grow our fleet management business and target new customer segments such as leasing. We will continue to nurture and grow our partner ecosystem of software developers, well positioned to new markets and are adding depth and breadth to our serves offerings. We have kept flies on scale by investing our Connected Car platform and to provide new APIs as well form the basis for accelerating product innovation. In line with the previously announced strategic review, we have reduced the size of the sports business to align the cost base with the market developments. We will continue to develop PNDs as the drive business will continue to provide a valuable platform for consumer insight and for collecting location data. To summarize, TomTom is well positioned capture growth opportunity across our Automotive Enterprises Telematics businesses. Many of our growth opportunities are driven by big industry trends including connected car, autonomous driving in Smart City. This concludes my part of the presentation, I'm now handing over to Taco. Thank you, Harold. Let me make a couple of comments on the financials. In 2017, we reported revenue of EUR 903,000,000, which is 9% lower compared with last year. Automotive Enterprise Telematics delivered a combined year on year revenue growth of 16%. Automotive revenue was up with 44 percent to EUR 91,000,000. The increase was driven by a combination of The deferred revenue position of Automotive increased to EUR 113,000,000 at the end of 2017, This is almost a doubling year over year. This contributed to our strong cash generation during the year. Enterprise revenue was flat year on year at 1,000,000. As a large proportion of our revenue is dollar denominated, We saw the effects of the weakening dollar, in the year. Telematics was up with 4% year on year to EUR 162,000,000. The recurring subscription revenue for the year increased with 7%. Consumer revenue decreased with 27 year 27 percent year on year to EUR 430,000,000, close to 80% of our revenue is P and D related. The remaining revenue is equally split over sports and automotive hardware. The gross margin in 2017 was strong at 62% and that's an increase of 5 percentage points year over year. Our EBITDA was flat year over year. Our adjusted net results, well, 61,000,000 which translates in an adjusted earnings per share of EUR 26. This compares to EUR 54,000,000 in an adjusted earnings per share of in 2016. At the end of 2017, we reported a net cash position of 1,000,000. Our cash flow before financing for the year was 28,000,000 12% higher than last year. And if we would correct for the acquisition of Autonomous early 2017, our cash flow before financing doubled year over year Let me now turn The graph on Slide 5 shows automotive order intake versus automotive recognized revenue and net deferred revenue on an annual basis. What we want to highlight here is the development into recognized automotive IFRS revenue and net deferred revenue on the balance sheet. Operational revenue is the reported revenue, plus the net change in the deferred revenue position. As we sell products to oath that include multi year updates and subscriptions, some of that revenue is deferred. Automotive operational revenue in the year amounted to EUR 245000000. This is an increase of 45% compared to last year. This EUR 245,000,000 is already above order intake that we saw in 2014 of Tunes and 1,000,000. And is gradually growing towards the order intake amount we announced in 2015. Order intakes from the past years will continue to contribute to strong growth of our Automotive business in the coming years. It will deliver growth through our recognized IFRS revenue, but it will also continue to increase the Automotive deferred revenue balance. Then on Slide 6, I want to make a short comment on the operating cash flows. On the slide, we plot the growth we are experiencing of our operating cash flows. Cash flows from operating activities grew strongly with 20% in 2017 to 1,000,000. As you can see in the graph. Then the new accounting standards. On Slide 7, we discussed P and L impact of IFRS 15 and IFRS 16. As of the 1st January 2018, TomTom adopted IFRS 15 revenue from contracts with customers and IFRS 16 leases, accounting standards. The IFRS 16 standard is early adopted in order to have only one transition year. This transition involves making adjustments to the opening balance and providing appropriate forward looking comments, reflecting the new accounting methodology. We have provided in the press release and also at the end of this presentation in the appendix, a full disclosure of the restated 2017 P and L and balance sheet. On Slide 7 and Slide 8, I will discuss the most important changes. Again, for a more detailed overview, I would like to point you at the appendix slides in the deck. Let's start with the P and L. Revenue on group level, total revenue is more or less flat. However, Automotive showed an increase of EUR 5,000,000 compared to our 2017 report numbers. While consumer revenue is under the new standard $6,000,000 lower. The increase In automotive, it's mainly driven by changes in our MAP revenue recognition and the lower consumer revenue is due to the reclassification of so called co op advertising cost, from OpEx to revenue. In coastal sales, the impact of the treatment of NRE nonrecurring engineering work is visible. The new standard requires that customization work, which is delivered to an OEM at the start of the production should be amortized at once. The related revenue must be recognized upfront as well if these are considered highly certainly. Under the old standard, we amortize the NRE engineering expenses on a per unit basis. As a result, our 2017 restated coastal sales is $6,000,000 lower compared with our reported numbers. Then OpEx. The restated OpEx is impacted by both IFRS 15 and IFRS 16. The IFRS 15 element is related to consumer marketing already explained before. The IFRS 16 impact 2,600,000 lower OpEx is related to the treatment of our office leases, which is partially offset due to an increase in our interest expense Now let me briefly touch on the impact on our balance sheet as well on Slide 8. The impact on IFRS 15 is mainly visible in our other intangible assets and deferred revenue. The decrease in other intangible assets relates to the before mentioned NRE treatment. Deferred revenue will show an increase of 18,000,000 An increase in telematics is partly offset by a decrease in automotive. For IFRS 16, Our office lease commitments are now visible on the balance sheet under other non current assets and non current borrowings. To summarize, 20 17 restated group revenue is unchanged at $903,000,000 Restated gross margin is 1% point higher at 63% and restated net result is 10,000,000 higher. Let me now explain the changes in the adjusted earnings per That is Slide 9. Following the implementation of IFRS 1516, combined with the ongoing transition share to better reflect our operational no longer correct for acquisitions. Also, as the majority of the 60.9 as shown in the first column on this slide, or well over 70% is related to the TLA Adlika acquisition of 2008. The new adjusted earnings per share is closer to free cash flow generation in absolute but specifically the trend highly correlates with the progress that we are making. We expect the 24,100,000 shown in the second column on this slide, to more than double in 2018. This is leading to our forecast That leads me to the last slides of my prepared remarks, slide 10. We expect revenue of around 1,000,000. Reflecting the continuous decline in consumer business, but also the growth that we experienced in automotive. And as we transition into a more software technology company, we will continue to increase revenues related to data, software and services. Thus we expect gross margin to approach 70% in 2018. As already mentioned, the adjusted earnings per share is expected to We expect the levels of investments, CapEx and OpEx combined to show a modest decrease compared to 2017 This is excluding potential acquisitions. Operator, we would now like to start with the Q And A session. Thank you. You. Our first question comes from Francois Bouvignies from UBS. Please go ahead. Hi, gentlemen. Thank you for taking my questions. The first one, I have a couple. The first one I had is on your auto bookings of above EUR 400,000,000. Can you tell us a bit what are the moving parts inside these sort of bookings, do you feel that you want market share? How is the ASP trending? And penetration of Indash maybe would be very helpful. On the auto bookings as well, you mentioned U. S. Customer win this year? Can you clarify if it's for the maths? And should we expect this trend to continue this year, meaning winning shares over the U S OEMs. I have others, but just maybe this one first. Yes, thank you, Francois. So Yes, we won't, so I think the order book, 400,000,000 plus is satisfying, and we were happy with that. And we were also happy that we didn't lose any, customers and we added new customers to the order book that we didn't serve before. So I think there was a satisfying year We significantly strengthened our position in North America, as we said also in the press release, we won a significant contract with a large North American OE for a full connected car stack. So not only software maps, but also maintenance of the system, map updates, services, etcetera. Last question, do you do you are we thinking that that can continue in 2018? I can't make any comments on that. I think the momentum we had in 2017 was good and convincing But at the 1st January, we start from 0 again and we will see what a year will bring. It's not just North America that we're focusing on there's important business to be done this year in, also in Europe and in Asia. And in terms of deals available on the market, how do you see 2018 as a global market like the number of deal available versus 'seventeen or 'sixteen? How do you I think the total market available based on what we know today will more resemble, 2016 2017. So it will be more like 'sixteen than 'seventeen. So if it's already in catch it. Yes, that's total markets. It doesn't say much about what we think we can win, but we think the total market of will be more the size of 2016 than it was in 2017. Okay. Thank you. A couple of follow ups on HD Maps. Can you update, like, how is it going in your conversation with your customers? Should we expect some contract this year and the business model for this HD maps? Yes. So, we made another it was another year of good progress on our technology, on proving the technology, proof of concept with a number of OEs proof of concept with the number of sensor makers, who want to work with us to assemble information manage information and distribute information. So I think we've made good progress on the technical side and the product side. Also, commercially, I think we were on the right track. And hopefully in 2018, we get some significant real opportunities to, to conclude some of those contracts. What we see for, self driving is that, the requirement, the demands from carmakers are too quote for yearly maintenance fee, and that's what we're doing. So in standard navigation and standard products, It's mostly a one off payment. When the vehicle is shipped, we see a trend in autonomous driving that carmakers want to pay an annual fee per car to keep the maps and technology up to date. Okay. That's helpful. The other question I had, it's, I mean, I'm sure it's important about Bosch and Continental. What's going on with your main competitor here? In sale as well. I guess it's something you are looking at. And the question I had is, how do you respond to that as your competitor is getting remain stronger and getting more partners. Broch is historically a strong partner of yours, Volkswagen as well. So how do you respond to this trend of your competitor getting more and more traction? Well, you need to be careful here and you can't read too much in it. I think it's important to realize that both County and, Bosch bought shares from the owners. So there was no new money invested in here. It was a transfer of secondary shares. And I think the relationships that we have with both Continental and Boris continue to be very strong and very deep. I think there's a bit of politics there going in, Doug, going on as well. We're not too worried about it. And we are kind of we are satisfied with the progress we're making and we hear this from our customers as well. Terms of technology and what we have to offer. So you don't think you need as well to strengthen some help from others like the way they do to try to for the industry to be more collaborative? Well, we do a lot of work on collaboration. So there is no question that self driving technologies, complex, there's a little players in the value chain. We recognize that and you see that also in our announcements, we're working with Baidu. We're working with Annuity. We're working with Bosch a number of others where we're working with what we have not disclosed. And I don't think it's necessary to have for shareholdings to make those partnerships flourish. I think we are a, you can see also in the marketplace that we are considered to be a good partner to work with you can see that also in the progress we're making in the various territories. And I don't think that, And I think that is actually a position where we can be flexible agile respond to customer requirements quickly. And I think that's what our customers really like. Okay. That's clear. And maybe 2 quick ones. One is your in your 2017 automotive revenues that you recognize on your P and L. Did you recognize already 2015 bookings or it's 2014 where where is the backlog in 2017, I mean, and starting in 2018? That's my question. And the other one given your net cash of SEK 120,000,000, what are you going to do with that? I'm sure you have a lot of investment to make So should we think about M And A telematics, automotive, what's the pipeline? Thank you. I can take that one. So, for Automotive, what the revenue that you see reported in 2017 is what we on the order intake in 2013, 2014 and definitely also 2015. But if it's in the later years, then it's more is related. So the time to market is then shorter than if it's content and software related. So the, a time to market for a surface, a pure surface contract can be, can be 12 months or even shorter. If you do a full system, meaning the content and the software and services, there tends to be a time lag of at least 24 months. And have you seen more and more contract of this kind? No. Well, we have, our offering is models in models. So we can offer it in a complete stack, but we can also offer it individually. I think the trend in the market is that the bigger OEMs tend to models from us in one go. So no, I would not say that the trend is that we sell it more separately. So on our cash position, we decided to, buy shares in 2017. That was only, done to stop further dilution as a result of our employee share option plan. And that was the only purpose as we have now over 5,000,000 treasury shares, we think that we will last at least this year. So we don't foresee to buy back any shares this year, we'll make that assessment again next year. What we'll do with our current cash position and also the cash that we will add this year, is indeed what you said that we will always assess bolt on acquisitions either in the technology area of HD mapping or what we did with autonomous, can also be telematics. But, yeah, that will be the focus of our cash position. Okay that's great. Thank you very much. Our next question comes from Mark Hesselink from ABN AMRO. My first question actually, a follow-up that you just said in the new pricing for autonomous driving functions towards an annual fee. What will it do for your, I mean, what you're getting out of that? Is that a better pricing? Is it better because it's a more definition map, how you're going to make that transition, towards the new business model? Going from the license upfront towards the annual fee? And second question is on discussions you had before with the your competitor here, with the investments from Borsch and Country and nearly the other ones, sometimes you read stuff in the market that there will be some kind of winner takes all kind of platform because one platform will get all the data and therefore will become that's that one? And then it's the other discussion that it will be whatever happens, it will be dual sourcing because the industry wants wants to have options. What is your view on that, that discussion? And the final question is on the guidance that you gave on OpEx plus CapEx to be down. Can you give a bit more detail on that one? Because if I'm correct, your OpEx also includes your your DNA. So what will be the cash impact for the, you think, also in the separate division? You probably have a lot lower cash out in the sports and the consumer in general, but do you expect to invest more in automotive and telematics? Thanks. Yes, thanks, Mark. I'll take the first two questions and then I'll hand over the third one to tackle. So the, I don't think there is a, so when we talk about standard maps or HD maps and the different pricing, I don't see a big, transition taking place. I think what we see at the moment Is it prices for HD mapping on a yearly basis are significantly higher than what we pay for that we can invoice for standard definition maps? However, the volumes are very small, certainly at the moment. And we also and also we noticed that car makers are not sure about the volumes they will produce of cars where they need HD Maps. So the range in the volumes is much wider than for standard definition maps. And that is because of uncertainty, of course, about the uptake of those new technologies. But the prices are going to be significantly higher, and they will repeat every year So the total amount per car per contract over the lifetime of the car is a little higher than than what we can currently charge for standard definition maps and services. Second question, is this a winner take all market? No, it's not That's not how the world works. And we see from carmakers also that they are influencing the sensor makers to make data available also to, to TomTom that's coming out of the vehicle. To have competing technologies, in the marketplace. And that is what we're seeing. And as a result of that, we're intensifying also collaboration with Senza makers across the world who are coming to us to see how they can integrate their data on top of an HD map. So it's quite an interesting development that we've seen last year. And for the and that includes and I don't think there's any sense or maker that we're not talking to in that respect. And where we don't have proof of concepts or where we have exchanges of technical information and product requirements. And then the 3rd question, I deferred it to tackle. Yes. So our OpEx in 2017 was, 595 roughly if you include everything, that is expected to decline with roughly 50,000,000 more than that amount, we will see in consumer, and we will see an increase of our spend in, in our mapping platform. So we will invest either through CapEx or OpEx more, to further develop our mapping platform. Then if you have a 545 for OpEx, the remainder is CapEx. South, ending south of 1 month of 50, do realize that if you want to make a like for like, that you need to add roughly $20,000,000 in that CapEx number that's IFRS 16 related. So if you take that out, you end up, let's say, 1 month 25,000,000 of CapEx. Okay. Thanks. Maybe one follow-up just to be sure. You said that the annual charge for the high definition map is higher than the like the full lifetime license that you're selling right now. Is that correct? Yes, that's correct. Our next question comes from Martin Dindrever from NIBC. Please go ahead. Yes, good afternoon, Gerald gentlemen. I'm just going back to the order book. I just was wondering if you can provide a little bit more color on. For example, the impact of having a contract from North America is that lower ASP, higher ASP corrected for volume, Is there any ADAS content in there? That would be my first question. And the second question relates to sports, so now it's been It's been properly downsized, but what was the EBIT loss, if you will, in 2017? That would help a lot in assessing the true performance from going from 2017 into 2018? That's the second question. And I was also wondering, you've had a somewhat longer term guidance with a CAGR of 15% for enterprise Automotive and telematics. Are you still abiding by that guidance or do you think it needs some updating? Thank you. Yes, if I can take the last two questions, to start with the kicker. So during our, analyst and investor meeting, at the end of 2016, we said that Automotive Enterprise And Telematics would see a CAGR of 15% from 2016 up to 2020 due to the change in counting, we need more time to update that number. And we want to defer that question to our Q1 results. The thing with IFRS 15 is that you need to go through all the automotive contracts 1 by 1, And that is, we've done that for 2017. We've done that for 2018, but we still need to do that also for the year to come. So I'd like to defer that answer to you, April. If you allow me, Then the other question was about sports. We have not provided, even numbers for that business line specifically We know that the EBIT for Consumer as a whole was not profitable in 2017. It is clear that is not acceptable and we, we estimate and we give a forecast that the, the, that there is profit for our segment consumer in 2018 That means that our sports business line will be, breakeven at worst starting, 1st January this year. And then for the first question about ASPs, in automotive segments. Harold? Yes. So the you referred to Martin specifically to the North American Contract. I can't say too much about it, but the ASPs are very much in line with what we have seen, but we need to provide more components for that. So you do the maps, we need We're doing the map updates. We're doing application software stack, and we're doing, services So in combination, that is a full package, with the ASPs that we have seen in the past as well. Okay. So it would be fair to say that you're not having to go an extra mile in terms of ASPs to get your foot in the door within the North American market. That would be too harsh. Well, yes, there's competition. Of course, there's competition and we're working hard. And you win it always on a combination of things. Price is 1, but we're happy with what we achieved it was a, it was a good deal for everyone involved. Good product. We're happy about the product we deliver. We can show all of our technology in a mainstream car, for the North American market, I think that will help us to further improve our market position in North America. So, it was high fives all around. Okay. Then just one question with regards to Q4. Is there any specific reason why the gross margin in the 4th quarter so low, relatively low. It was up year on year, but relatively low to some of the upticks we've seen in previous quarters, despite having strong growth in automotive, reasonable growth in telematics and had decline in the low margin consumer. I was just wondering if you have a bit more granularity on that, a bit more color? Yes. The reason for that is, is consumer sports. And so we had a very thorough look together with our accounts into our books and what we provided for. And, we had to take some additional provisions in Q4 that affected our gross margin. The real focus for gross margin is now in the year that we're in and that is that we will, grow towards 70%. Okay. Don't want to quantify the additional provisions that impacted your gross margin. I know you've given the guidance for 2018, but still just to get a bit Better understanding? I would like to quantify. I don't have it at hand. So I will follow-up later. Okay. Thank you, gentlemen. We will now take our last question from Mark Swachsenburg from ING. Yes, thank you for my questions. First of all, Taco or Harold, do you have any idea or can you give an indication of what percentage wins of the RFQs that were in the total market opportunity was in 2017. So just to get a feel for how I should interpret the size of the order intake in 2017 compared to a bit of market share fuel? I'm sorry, Margaret, we don't have that number. We haven't worked it out. It is, and I can't give it to you. Our impression is that we are on the good side share with customers that's a full into our camp that has never where with whom we've never had a relationship, especially in North America. We had a breakthrough deal And, so our impression is that we are gaining market share But some of the business that's available is not visible to us, as you can imagine. So it will be difficult to give you an overall market size number and our market share in terms of wins. Okay. And then looking to automotive, can you give us an indication how we should look to 2018 in terms of facing in or former order intake? And how that compares to the period after 2018, because I have the indication from the outlook and the top line that your growth in automotive will be a bit less than what we've seen in 2017, but is that a phasing effect? Can you give us a bit of a feel for how these order intake, previous order intakes facing in 'eighteen and then perhaps 'nineteen, 'twenty? Well, you will see growth in automotive, of course, in revenue, coming through in 2018, but also that we are, putting a larger proportion of our income on the balance sheet is deferred income. Due to the new rules. It's difficult give you more color than what we've done already. I think we're motoring in the On the automotive side, it's going, it's going well. You can see it in the order intake. You see it as a trend. I think that's what that's what we're looking at. But is it fair to say that you say that you will see as a mid double digit growth in automotive previously more than 40 and And that perhaps an acceleration after 'eighteen, again, just due to the phasing of these contracts that had previously been signed. Well, I wouldn't dare say that. So we had a, of course, last year, we had a full PSA volume coming on stream that gave us a big kicker. That's not going to repeat itself in 2018. And it will take longer for the, the 20 17 K per will, that kind of revenue that we booked in 2017 will no materialize before 2019. Okay. And then maybe because beginning of January, it was a bit too early. Can you give us an indication of the IFRS 15 impact on 2018, whether that is also say a small positive or a large positive or maybe negative? Can you give us an indication, maybe, Tara? Well, we hope provide, have provided that information, in the call, we organized in January and also the slides that we present today. What we said, right, consumer is structurally lower because the co op marketing activities can no longer be seen as revenue. Automotive can be higher or lower. It depends. So you can't say it will be structurally higher or lower. And then there are things happening in the cost of sales line that normally cost would flow out during the lifetime of the contract and now you need to take them at once. So overall the, the effects of IFRS 15 are not necessary bad, but they are just different than what we've seen before. We can't yet say for 2018 whether there will be whether it will be positive or whether it will be negative too early is that a good understanding of where we stand at the moment? Differences in recognizing revenue in automotive is that you approach the contract from a total value basis instead of a volume approach. And it can be that during the execution active, due to tailwinds or headwinds. IFRS 15 will, will tell you that you need to take that correction, at once. So if your assessments as well, the total value of that contract with hindsight or with hindsight during executing that contract is higher or lower, you can see corrections. And so, yeah, it's 18 higher or lower compared to what. So we have provided the guidance on the basis of IFRS 15. And then perhaps a question on the OpEx line, There's quite a surge in the amortization of technology and databases, in Q4. And therefore also the cost base with IFRS 15 and 16 and everything in there. The cost base is higher than the old under the old situation. Is, should we model going forward, the technical amortization at the level that we've seen in Q4? Is that how it should work? Well, there already said, there were some incidental. So I think that that amortization, the amortization line in the OpEx specifically will not go up in 2018. So it was roughly 110 in 20 17 and will go to 100 or so in 2018. D and A as a whole, that's a different story. Because there, we had, had a restated number. It's roughly 1 on 10 80. And we think that the decline will be bigger as we'll go to 155 or so. So if I then look to your statement on the EUR 50,000,000 lower OpEx line, how should I read the DenFX include all the one offs that we've seen in 2017, how would it then develop 2018 to 2017? I'm not sure if that includes a few of these This is what I just gave you is a like for like comparison. So we go to 545 roughly in OpEx and that is excluding any funds, funds, etcetera? Yes. Okay. And then perhaps a final one on the deferred revenue in 2018 or cash flow. Because you had, say, your free cash flow in 2017 of around 50 that should go up in 2018, but can you also give a bit of an indication how much and where it should come from? Yes. So it will, it will go up with more than 50%. And where it comes from, yes, what we already alluded to is that it is mainly due to the increase or our automotive business. So our free cash flow generation, if you correct Thomas acquisition and if you correct for the share buyback was close to $50,000,000. And we foresee that number to go up with let's say, 50% or so, this year. And that's also reflected in the adjusted earnings per share guidance that we've given But it's more than the growth in automotive. So is there also a release in former forward deferred revenues or am I missing something? No, the opposite. The, the deferred revenue will increase. Deferred revenue will not have an effect on the free cash flow. All right. Those were my questions. Thank you very much. I would like to thank you all for joining us this afternoon. If you have any follow-up questions at a later time, please don't hesitate to give us a call. Thank you all very much.