Earnings Call: Q4 2016

Feb 8, 2017

Good day, ladies and gentlemen. Welcome to the TomTom Fourth Quarter And Full Year Twenty 16 Earn Conference Call. Please note that this conference is being recorded. I will now turn the call over to your hostess for today's conference, Jacqueline Overvest, Investor Relations Officer. You may begin. Thank you, operator. Good afternoon and welcome to our conference call during which we will discuss our operational highlights and financial results for the fourth quarter full year 2016. With me today are Harold Holdain, our CEO and Taco Dietilar, TomTom's CFO. You can also listen to the call on our website and a recording of the call will be available shortly afterwards. 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 2016 financial results and the financial outlook for 2017 from Taco. We will then take your and welcome, ladies and gentlemen. Thank you for joining us on today's earnings call. We've lived on our updated 2016 guidance with revenue of 1,000,000 and adjusted earnings per share We are shifting towards high margin software business, which now reflects nearly 50% of our revenue mix, and more than 70% of our growth result. As a result, growth results grew strongly this year with 9% and gross margin grew to 57%. Thacker will provide further information on the financial highlights and the financial outlook for 2017 later during the presentation. I will now discuss our key operational highlights and strategic priorities. Our automotive products continue to do well and that resulted in order intake for 20 seen more than EUR 300,000,000. Order intake for previous years now are starting to deliver a strong revenue growth in Automotive. We're working with the majority of automotive OEMs and Tier 1s to integrate our high definition map product samples into their self driving systems. We acquired earlier this year an autonomous driving startup with around 35 employees of which a majority holds a PhD in fields that are of key importance to autonomous driving such as artificial intelligence, neural networks, robotics, cognitive location analysis, computer vision algorithms, signal and information processing, We have acquired a vast amount of technical expertise that will be of value in the further development of our location technologies. In the quarter, we partnered with Loosid Motors and entered some smaller contracts with Tier 1 and Tier 2 suppliers including Digin through which Tantal Maps software and services appeared in models from Mitsubishi. The initiative innovative nature of our products was recognized by Fierce Chrysler, who gave us an award for innovation supplier of the year 2016. In licensing, we announced a partnership with Microsoft to integrate our APIs into the Azure platform. Our technology will power the location component of the Azure Intelligent Cloud this partnership opens up a large market of enterprises and software developers who are already using Azure for application development. We also expanded existing agreements Telematics business has continued to grow throughout 2016, reaching nearly 700,000 cribers by the end of the year. This growth has been realized organically and represents a 15% increase compared to the end of last year. Our consumer business is transitioning from a declining P And D markets to a growing sports business. In 2016, we shipped over 1,000,000 sports devices. To confirm our commitment to the sports business. We introduced a Samsung Sports brand and an advertising campaign to encourage people to get going and live healthier. Moving to the next slide. Let me give you a short update of our strategic priorities. Over the year, we have advanced in Maps online services, including traffic and navigation software. These location based applications are licensed through our automotive business to automotive customers and to mum Automotive customers through our licensing business. But given the similar nature of the products we have decided to combine Automotive And Licensing business going forward, for strategic and reporting point of view. In Automotive And Licensing, we aim grow through technology leadership in real time mapmaking, traffic services, application software, in a wider range of location technologies. New growth opportunities in ADAS and autonomous driving are now materializing Within Telematics, we continue to grow our fleet management business and new connected car services such as vehicle leasing will start to contribute to top line growth in 2017. We expect to increase our market continue to invest in our Connected Car platform to provide new APIs that will form the basis for accelerated product innovation and we will continue to nurture and grow our partner ecosystem software developers will help us turn to new markets and are adding depth and breadth to our service offerings. As I mentioned earlier, The consumer is transitioning from a declining P And D market to growing sports business. We have established a robust and growing consumer sports category and we will invest for further growth with the ambition of being the number one sports wearable brand in Europe. As well as having growth potential. The sports category is a good fit with the brand and our capabilities in smart devices with associated cloud based applications and smartphone applications. We will exploit niche growth opportunities in the drive sector, such as our bridge driver terminals for businesses which take advantage of our device platform and capabilities. To summarize, we feel we're well positioned to capture growth opportunities across our automotive licensing telematics and consumer businesses and many of those growth opportunities are driven by big trends, including connected car, autonomous driving, smart cities and wearables. This concludes my part of the presentation. I hand over to tackle. Thank you, Harold. I shall now begin a more detailed look at our financial results. I will mainly focus on the full year results 2016. In 2016, we delivered revenue of 987000000, 2% lower compared with last year. Automotive, telematics and consumer sports, grew strongly, partially offsetting the reduction in consumer drive revenue. With 40% of the group total consumer drive remained the biggest revenue contributor for the group. This percentage as a percentage was 48% in 2015. Automotive revenue was up by 25% to EUR 133,000,000 this year. This strong growth reflects increasing revenue on new contracts that started to kicking during 2016 as well as higher revenue on existing contracts. The deferred revenue position of automotive increased to EUR59,000,000 at the end of 2016. This contributed to our strong cash generation during the year. Licensing revenue decreased 4% year on year to 1000000 and telematics revenue was up by percent year on year to 1,000,000. The recurring subscription revenue for the year increased with 21 percent to EUR 118,000,000. Recurring subscription revenue represents 76% of the total telematics revenue and that is up from 72% of the total in 2015. Consumer Products revenue decreased by 9% to roughly 500,000,000 in 2016, This decline was driven by lower P and D revenue, which was partly offset by strong growth in sports revenue. Swartz revenue amounted to more than 100,000,000 in 2016 and that represents an increase of 53% compared with last year. The Consumer P And D markets were weak during the second half of twenty sixteen. The European P And D market experienced the faster rate of decline compared with the first half of the year. The market in units was down by almost 20% for the year as of all. As Harold already mentioned, despite a modest decline in our group revenue, we have seen an increase in our gross margin and our growth results this year. High margin software business now reflects nearly 50% of our revenue mix and more than 70% of our gross results mix. As a consequence, our gross results grew strongly this year with 9% and our gross margin increased to 57 percent of total. Operating expense for the year were $557,000,000 compared to $518,000,000,000 in 2015. The year on year increase was driven by higher amortization cost, which grew from with more than 20% to $123,000,000 in the OpEx lines. 2016 EBITDA grew by 14% year on year, to EUR 141,000,000 and EBIT amounted EUR 9,000,000 versus only EUR 1,000,000 in 2015. Reflecting the higher growth results, partly offset by an increase in OpEx. The net result for the year was 1,000,000, which translated in an adjusted earnings per share of on a fully diluted basis. Free cash generation amounted $35,000,000 in the year. And at the end of 2016, we reported the net cash position of voluntary 3,000,000 and that is up from 98,000,000 at the end of 2015. The cash flow used in investing activities was EUR 120,000,000 in the year. This is a decrease of 34,000,000 per to last year, which include 2 acquisitions of combined 42,000,000. Investments in 2016 related to our transactional map making platform, the map database and automotive customer specific projects. Now let me go to the next slide the automotive order intake. What we show on this graph is the automotive order intake since 2013 in the gray bars And we compare that with the reported automotive revenue and the addition to the deferred revenue on our balance sheets. What I want to highlight here is the development of the order intake and the translation thereof automotive P and L revenue and the net deferred revenue on the balance sheet. Recognized revenue, together with the net deferred revenue on the balance sheet, represents the total operational revenue in a year for automotive. For example, adding recognized revenue of 1000000 and a net deferred revenue of $36,000,000 for 2016 totals $69,000,000 in 2016. If you compare that with the operational revenue of 2015 of $160,000,000, This represents a growth of 46%. In 2017, we expect to report end. And together with the addition to deferred revenue on the balance sheet, this will present an operational revenue of above 200,000,000. Order intakes from 2014, 2015 2016. It will continue to contribute to strong growth of our automotive business in the coming years. It will deliver growth to our recognized P and L revenue, but also it will continue to increase the Automotive deferred revenue balance. The last slide, the full year outlook of 2017. As already communicated in the press release, we expect revenue of between SEK 925,000,000 and EUR 950,000,000, the adjusted earnings per share is expected to grow to, around EUR 0.25 and we expect a combined revenue of automotive, licensing and telematics businesses to grow above 10% year on year in 2017. This is in line with our previous expectation of their combined revenue CAGR of 15% between 20 in 2020. In Consumer, we expect the P and D revenue to continue to decline and this will be only partially, offset by growing sports business. We expect the level of investments, both CapEx and OpEx to show a modest increase compared with 2016, excluding acquisitions. In particular, reinvesting in advanced content and software for the Automotive Industry and in our map making activities. This concludes my part of the presentation and operator, we would like now, we would now like to start with the Q And A session. Ask questions. You. We will take our first question from Francois Babinet from UBS. Please go ahead. Hello. Thank you for taking my questions. I have a couple if I may. The first one is on your P and D performance, obviously, in 'sixteen, which were lower than expected, at least that's the number. Given the outlook in this business, what should we expect in terms of actions in 2017, that you could make? And what is your strategy for this business, going forward given the trajectory of the growth. The second one is on the M and S strategy. You acquired a new business recently. Do you need to acquire more businesses in 2017 and beyond? That's the second one. And the last one is on the order intake. Can you give maybe qualitative comments around your number like market share, ISPs? How do you see it going forward as well? Thank you very much. Yes, thank you very much. So, 1st, let's have a look at the P and D market. So it's still, it is a declining market. It's been a declining market for a long time. And, we continue to play in a space. We run that a profitable operation we bring, and we have brought our cost in 2016 in line with the new market size We expect that the market will continue to decline in 2017 and beyond And what we will do is we'll bring the costs in that segment in line with those new real these. M and A strategy, We've nothing planned in for 2017 or beyond. There's not something that that we want to acquire or where we are for the lookout at this stage. We continue to look at opportunities for Telematics. As you know, we've done it in the past. We've acquired 4 businesses if and when there are opportunities to make a deal in that space, we will look at that fairly carefully But otherwise, we don't have anything planned. And the third question was order intake for automotive? Yes, your maybe your market share, how do you see evolving and DSPs and, yes, the trend of the market inside the? Thank you. Yes. Market share, I don't know, to be honest, because we don't have the full picture there's nothing that is, that we can, you know, there's no, external party who is charting the size of the market. So it will be highly speculative for me to give you a number there, but I think the trend is that we are increasing our market share you've seen that in 2016 where we continue to grow. So I think we're on the right track there. ASPs are, we see 2 things in ASPs, we see the prices for Maps as stand alone products coming down slightly but we also see increased demand for new services and products. And that includes software, mobile phone applications, updates services, traffic services, parking services, and so on and so forth. So the total available amount of money per car is actually going up. Thank you. Okay. Thank you. We will now take our next question from Martin Dendrever from NIBC. Please go ahead. Yes, good afternoon, gentlemen. With regards to your CapEx OpEx in 2017, Can you share with us if that assumption includes or is based on the current client roster Or is that already taking into account the assumption of contract wins? That would be question 1A. And if you look at Automotive and your ambitions for market share gains, and I think that you mentioned sense as a or 50% longer term target. How should we then think of CapEx OpEx going forward? Do you expect it to continue to increase given that for each large client that you win? Which is only logical if you have to get to the 45%, 50% market share. Do you expect that then OpEx CapEx to continue to increase or are there some learning effects or other elements that could bring increase to a lower level? Let me take the last question first. So, if you win an automotive deal, then, a couple of things happen. So typically, if you sell the full stack, you sell, maps, cloud maps, software applications, services like traffic And, and that's it. So and then of course, you need to sell, you need provide integration services as well to get all that, software running on our ad unit. The only variable bid, in principle is the integration service, which is a small proportion of a total deal size. And the amount of money we need to spend per car to get that software running on my specific hat unit is typically coming down. And that's because the quality of our components is is better. We've done it before. We have incorporated features and functionalities on the amount of other customers, and we can resell those. So it is a highly scalable business. The same is true for, traffic services and other services. Now sometimes, we need to do something extra in the map. Yeah, because a customer is selling cars where our coverage is par. That doesn't happen very often. But it does happen. And then we need to additionally make some cost in, in additional map making or improving certain map elements or attributes. But in principle, the automotive business is highly scalable, except for integration services, but those integration services are a small proportion of a total deal size. And Martin, to answer your first question, we have an allocated part in our planning. For deal wins. That means that if we if the structure or the size of the deal wins is more complicated or large than we have anticipated, then OpEx and CapEx can be higher and the other way around. Okay. And to put it differently, if you win a Toyota North America, we're looking at higher CapEx OpEx if it's a contract like Daigen, you'll be fine. That's the way to look at it? No, it depends. Depends. This it's not always volume based. It is more what the customer asked for. So is it in a standard map or is it a map plus software or map plus software map updates, etcetera? So the size of the opportunity, there is some form of correlation, but not necessarily. Okay. And then the final question for Harold. And at the TomTom Tech event, you guys have been very open about the competitive advantage that you have relative to here. Alan was saying that you've tried a couple of times. Did you have it right now? You have a competitive lead, if you will, for around 3 years. Recently, there have been a number of announcements by here with partners like Mobileye. I know that these are just announcements of partnerships, but do you feel that your competitive advantage has slipped or is may slip, or do you feel as confident as in November? Yes, I do. Yes, no, I don't think that our competitive advantage is slipping at all. I'm confident that we have that lead and that we continue to build on that. And I don't think those announcements that you're talking about make any difference to that, competitive position, So, no, we feel good. We feel good. And I think, and I think, you know, and we feel good not because we want to feel good, but that's also what our customers at times. So our customers are giving us strong indications that we have a good grip on HD Maps, on real time map making, trafficking from and all things that matter, we do have that, that edge. And I think we will continue to accelerate that rather than slow down because now we have that platform in 2017 we can start building on top of that. And that will lead to higher degrees of automation, reduced cost, reduced cycle times, that real map is becoming a reality. Okay. Thank you very much, gentlemen. We will now take our next question from Mark Hessling from ABN AMRO. Please go ahead. Yes. Thank you. Firstly, on the order pipeline for automotive. You've said in the past that 2016 was a bit more quiet year versus 2015, still signing up a similar amount of orders or what is your feel for this year? Are there a lot of contracts awards in the market this year? Yes, sure. Yes, yes. No, that's what we said. 2016 was a small year in terms of available order size. 2017 will be bigger. So the order, the RFPs that are available in 2017, In aggregate, are significantly higher than what was available in 2016. Does it mean we've worn it but the opportunity is bigger. Okay. That's clear. And the second is actually a follow-up on those partnerships. Like you said, it didn't really impact the competitive advantage at the moment. But is this kind of part Is that something you're thinking about yourself as well? Or do you think you have an advantage if you're stay relatively standalone in developing this? No, we have no desire to be standalone and we're not standalone on. We are, we are part of that ecosystem. We have partnerships with a number of companies in that space. We are expanding those partnerships, it fits in our vision of more open industry that is driven by standard and, I'll take a year, we're fully embracing that. So I don't see any strategic shift or any issues. Okay. Final question is on, more your view on cost in the medium term. You have now you had a step up of cost in 2016 now until 'seventeen, you have the benefit of consumer costs are coming down, but rest still was still up. I think there's some, sometimes a fear in the market that you are, you will continue to have invested quite heavily for all these new functions in automotive. Do you have a bit of a feel on where do you think if there's a continued high gross growth environment or that it is more more modest in the medium term? Well, so you need so you see the order intake in automotive. I think that speaks for itself. You see new partnerships, including the one with Microsoft, which is important. We've indicated that we will grow 50 cent per annum, those business to business activities for the next 4 years. So that means that from a, 2006 net revenue was about 425,000,000 unit euro combined that will grow by 2020 to about will give you that 15% CAGR. That's a and that is very high margin revenue with an average growth margin of 85%, 90%. So that will so we see very significant growth there. We will increase over the years, some of our OpEx and some of our CapEx, but nowhere near what we're seeing in top line growth in the next 4 years. Okay, that's clear. Thanks. We will now take our next question from Mark Swattenberg from ING. Please go ahead. Yes, thank you for taking my questions. First question, could you give us maybe underlying EPS 2016, if you would have not had deferred revenues or IFRS, could you give us an indication of the underlying profitability, please? My first question. Yes. Can you give also the second question then? I've got multiple. Well, maybe the second one then. If you look to your OpEx and cost of sales, there seems to be a step up in your amortization in there of technology. Could you provide us what the impact was in Q4, but also how you look to 2017? There will be a step up. Again, I assume in the amortization. Can you give us the split how that that phases into both cost of sales or in the OpEx? And maybe comment also then if you strip it out and just look at OpEx excluding these kind of non cash items, Well, then the direction is of your OpEx because I still hear a lot of questions about operational leverage and your OpEx growth versus your top line, but if I if I'm not mistaking you out, we'll give a strip that out. The OpEx growth is actually quite modest. And, maybe also in relation to your EPS guide, how much was the impact of this amortization on that front? I know you adjust for it, but it always had some impact. That's my second question, which is quite complex. Yes. Okay. So, to the Yes, so we've broken out the amortization in our, in our press release. I'm sure you've seen them. The total amortization in 'sixteen was 1 month in $32,000,000. If you only look at the OpEx part, that was more than 23,000,000 and that represents a 21% growth. There's nothing in there what we would identify as an extraordinary item. And that makes us feel that we need to highlight it more than we're already doing. No, but there seems to be an acceleration towards the end of the year. Is that correct? Yes, in this case, that is the case indeed, but that not structural apart from that the underlying amortization will continue to go up also next year. At a guidance for next year is that we will see another $10,000,000 to $15,000,000 increase of our D and A line, our combined D and A line for 2017. So I don't want to go to earmark all kinds of incidentals in every quarter. There's more the bigger, the bigger trend happening in our DNA line and that is in the continued, growth and that is just following the growth that we've seen in the CapEx line over the last year. And the $10,000,000 to $50,000,000 is all in D and A. Nothing is in cost of sales. It's all in D And A, but it's not all in OpEx. So the the cost of sales part is $10,000,000 to $50,000,000 max. Okay. The first question, could you perhaps answer that one first on the EPS adjusted for deferred for 2016? Do you have that number? Yes, I think it's a $0.04 negative impact for the full year. Okay. So we had to add $0.04. That's what you're saying to adjust for the deferred sorry? Hello? Yes, we didn't. We're adding $80,000,000 to the balance. Right? Yes. And the $80,000,000 that we are adding to the balance, you need to, that's high margin business. That you need to be divided by the outstanding shares. So if that's roughly 2,000,000 or 40,000,000 shares that we present 4¢. Then, a question on, on deferred revenue, the guidance, because there's a bit of mismatch now between your P and L numbers and your cash flows because of all these deferred revenues. Can you give us any indication what will be already giving some guidance on deferred revenues for Automotive in 20 17, north of 4, just how, what was the number? Can you give us an indication of the impact you would have on your cash flows next year from capitalizing all that and reducing it. Yes. So if you look at the line by line, I think telematics is probably more or less a worse or maybe an increase in the deferred position, but that will be single millions. Consumer will start to release on the deferred revenue line. But for automotive, we expect a large increase for and that that increase will be, we expect that will be more than the increase that we saw in 2016. And licensing? Licensing is more triggered by seasonal patterns and customer payments, there's no underlying trend there. Similar to telematics. If we add it all up, it comes down to the automotive part, which we should add to your cash flows. Yes, ballpark numbers, let's say, a releasing consumer of $15,000,000 and an increase of automotive of $50,000,000 makes an increase in deferred revenue line of $35,000,000. That's clear. On the gross margin, what are your expectations there going forward? Because that makes us improve. Yes, exactly. So the clear trend to where consumer used to be 48% of our group mix in 2015. We think that will, decline 1 third of the group mix so that we'll have an impact on our gross margin, together with the continued increase of, especially auto market. So we were confident that we can, past to 60% for a full year basis in 2017. And then you have the negative? The year beyond that, I don't want to give too much concrete guidance, but the trends are obviously towards a further strengthening of the gross margin. Yes, but would you say for 2017, you can see maybe already a 4%, 5% increase or is that a bit too wild given the diverse part of revenue? What I said, so it is, we reported an gross margin of 57% and we're comfortable enough to say that the gross margin for 2017 will start with the 6 Okay. Then, one more here. Yes, the cash out for acquisitions expected in the first quarter, what should we take into account? That payment is still due? I Yes. It's something like $25,000,000. And then the last one, coming back to the here analysis teaming up also with Vidya. And I think also there was some questions on the Capital Market Day in November, where people asked for the exclusivity of that contract and it wasn't at that stage yet. That was the answer, but it also seemed a bit like it was rather exclusive or not going to be as competitive, but then we see the news out here a few 2 months later that they also team here. How do you see that? That also here is in there with Nvidia. How do you look to those kind of news items? How does it impact you? Yes. This is, as I said, the big industry, a lot of players, Nvidia wants to, play an important role as a computing platform I think what is very interesting for us is that we that the relationship is very, very good. We have defined joint research and development programs. The DRIVE PX2 platform will come with standard sample maps, high definition maps of TomTom included. So, software developers can start playing with that and see how it all works in practice. Corporation is developing nicely. And I'm very happy with the partnership, and we will continue to nurture it. All right. All those were my questions. Thank you very much. We will now take our next question from Andrew Humphrey from Morgan Stanley. Please go ahead. Hi, good afternoon. Thanks for taking my questions. I have a couple on autos and then one on Consumer, if I may. Looking at the profile of the orders you've been announcing over the last few years in autos and the target you've you've given us there for 1,000,000 of revenue. I'd like to understand, could you reach that million effectively without signing any additional or from today. So what scope is there for growth beyond that figure, I guess, is how I phrase it? Secondly, on the autos business, conscious when you announce, booked orders, there are a lot of assumptions on pricing attach rates and the like that go into those order book numbers. Any additional that you could give us around that would be great. And my third question on the Consumer business is, Clearly, it looks to me from the guidance you've given us though. That's where the bulk of the downside is this year. There's clearly also a material decline in the automotive hardware business that goes into the consumer segment factored in there. So my question on that is to what extent are we kind of getting into the territory of the LoRa small numbers with that of hardware business and how much conservatism is baked into your assumptions about that PND business, which is obviously still somewhat more material there. Yes. Okay. Yes, thank you. So the first question is can we reach 1,000,000 revenue without signing up any orders? The answer is yes. We can. Then Yes, it was about hardware and consumer. Yeah, that's a bit of an old one. We, we did a deal. I think it was back in 2009, if I'm correct, where we start to sell hardware into, to one of our customers, We have, long since decided to stop, doing hardware, but this is a tail end of the contract will run down. It has actually a much longer shelf life than everybody had expected, but it is running down. And that will see I think that will come down completely in 2019 at this recurring planning. And so from 2019 or 2018, even I think it will come down completely to 0. But that is automotive hardware that's reporting consumer side and it carries, mobile high margin there. Which are the reasons to stop it in the first place. When we communicate the order book, and your intake, we base ourselves on the numbers that are provided by us in the RFQs, from the car maker the carmakers obviously give us the numbers, both based on their own planning. Traditionally those playings are reasonably accurate, and often somewhat on the conservative side. They're not 100% accurate, but for planning purposes, they are, they are good enough. In our expect in our experience. And then the last question, Just about the, the prospect of any material difference in the DND business from what you're currently assuming? No, yes, at the end of the day, we don't know. So, we did decline was faster in 2016 than we had anticipated. And what we could anticipate based on historical 1st. So the decline in 2015 was very benign. It was a bit more aggressive, and especially in the second half twenty 2016. And we continue to plan based on that more aggressive scenario for 2017 and beyond. Thanks. That's great. Yes. And then within the category, there are some growth areas as well. So your MoSAC product, your UA programmable terminal for business applications. Those are in that mix are growing quite nicely, but it doesn't represent a very large number. But they are growing. And we can play in that space because most of the technologies we have to develop anyway, we are developing for automotive customers. Reporting them on a PND package them, if you like, on a PND for, for those type of applications and markets. Great. Thank you very much. We will now take our next question from Shyam Kumar from Tuabary Partners. Please go ahead. Hi there. Can I just follow-up on consumer? I guess given it's obviously and PNDES in particular, given it's obviously a much less good business than the rest of the group. Yeah, it's facing structural headwinds. I don't think it generates much cash. It's been responsible for 2 revenue downgrades in the last 6 months, which has seen your stock price fall like today, 8% to 10%. And I would argue is the reason your company is woefully undervalued at euro versus some of the parts of valuations from the likes of ABN and ING. 14 to 15. Is it not obvious that a very strategically positive thing to do for shareholders? It's either dispose of that business or make a more aggressive attempt to shut it down and divert capital and resources for the software and services part, please. Yes, thank you for the comment. I hear your I hear your concerns. I don't think it is as dramatic as you just picture that, that that this is, it's not that distracting from management. But it certainly is for investors. Definitely is for investors. And they're right to have been distracted by it because, you know, many investors say they're not interested in investing in TomTom because of what they consider a bad hardware business. And actually on two occasions in the last 6 months, they were right not to have invested on that basis, despite the amazing stuff going on in the software and services parts business, which is huge credit to you guys. Because of kind of succession of revenue downgrade. So it's the year 2017, and we're still 2017, we're still having a kind of revenue downgrade and disappointment based largely on consumer. And I just feel a more aggressive approach is needed from you guys at this at this juncture, because it's very obvious that PND's in structural decline. I'm not sure how much cash you really, realistically think you're going to get out of the business. And I'm just wondering why the steps and the motion isn't in place to get ahead of the obvious decline before it turned into structural loss making business to try and salvage salvage it now? Yes. Thank you for those comments. I don't want to comment on that right now. We take it into account. Thank you. Okay, fine. And now I've got one more question just on here. Given the structure of here whereby it's entered, it's had stakeholders make an equity stake in the map, sorry, in the company itself, is there not an industrial logic for that? And what I'm wondering is Is the industrial logic not based around maybe getting guaranteed access to data? Or what if they're doing it, why is it not logical for you to do it? What's their industrial logic that is not what you're sharing? You're referring to the HEAR situation? Yes, they hear structure. They're selling stakes in their map left, right, and center. And there must be an industrial logic to that. Besides just reclaiming some cash because they're owned by the biggest source of companies in the world. So is there an industrial logic they're thinking, which is hey, we get guaranteed access to data for the rest of our lives, which is maybe a risk point that, you know, maybe you should address as well. Yes. Yes. So I think industrial logic for the, for the German carmakers buying here is not strong. But the, and I think it comes with the law of, of negatives as well. But you're right. The access to probe data and sensor data is going to be ported, and we're fully aware of that. And our cost reason, which we with whom we are working on HD Maps and those location technologies also understand that, that the data is important for us. So I think what we have pulled off in, in traffic, where we get probe data from all of our customers is a good model for us to continue. And I don't think you need a, those carmakers need to participate in the capitals. I think that comes with more concerns and more downside than just being a neutral player who is, making a mark based on technology and forward looking technologies. So I don't see that industrial logic at the moment. Yes, probe data is important and yes, we are working on that. Okay. And just one last very boring one. As the hardware division calls, how much cash can be released from inventory or just low inventory level going forward, please? I deferred a question to the CFO. Thank you, Harold. Yeah, tens of millions. Okay. That's everything for me. Okay. As there are no further questions, 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 give us a call. Thank you all very much. Operator, you can close the call. That will conclude today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.