Earnings Call: Q3 2016

Oct 21, 2016

Good day, ladies and gentlemen. Welcome to the TomTom Third Quarter 20 16 Earnings Conference Call. Call. You. Please note, this conference is being recorded. I will now turn the call over to your hostess for today's conference, Ms. Sarah Bostick, Head of Treasury And Investor Relations. You may begin, Madeline. Thank you, operator. Good afternoon, ladies and gentlemen, and welcome to our conference call during which we will discuss our operational highlights and financial results for the third quarter 2016. With me today are Harold Houdain, our CEO and Aco Titulaire, our CFO. You can listen to the call on our website and the recording of the call will be available shortly afterwards. And as usually, I would like to point out that Safe Harbor applies to today's call. We will start today with Harold who will discuss the key operational developments followed by a more detailed look at the financial results and the financial outlook for 2016 from Taco And after that, we will take your questions. And with that, Harold, I would like to hand over to you. Thank you, Bizzara, and welcome gentlemen. Thank you for joining us today. We reported revenue of $239,000,000 in the 3rd quarter, which is 6% lower compared to last year. Our average gross margin was strong with 60% as we are reducing our dependency on hardware products and growing our high gross margin, recurring data software and services business. Gross profit for the quarter was up 7%. Taco will provide further information on financial highlights and financial outlook for 2016 later during the presentation. I will discuss the key operational highlights for the quarter. Consumer P and E markets have been weak over recent periods, which caused decline in our consumer revenue. We saw our sports revenue more than doubling year over year, but this could not offset PND decline. We have seen this quarter. In sports, we introduced a new range of sports watches, including new GBS watch for outdoor activities with dedicated sports modes for hiking, trail running, skiing and snowboarding. We also introduced a new TomTom Touch, our first fitness tracker, that combines body composition analysis with steps, sleep and all their heart rate tracking. The automotive licensing and telematics businesses are developing in line with our expectations. In automotive, we continue to make good progress in delivering our connected navigation system components to existing and new customers. Peugeot, I cockpit, is enhanced with Stolton navigation, 3 maps and traffic services, and the first car model to introduce the new I cockpit with our navigation components is the new version 3008 Tonton Traffic Services already available to sister companies Audi Volkswagen Porsche and Pently, will be extended to SCO dot car models across Europe in the course of 2017. We also announced Subaru's next generation information platform will be equipped with our maps and navigation software. This product will be launched first in North America with the old new 2017 Subaru Impreza. Finally, Volvo Trucks select this as the supplier of Maps traffic and navigation software for their new infotainment system launching 1st in Europe in 2017. Order intake for this year so far is about 200,000,000 and that's in line with our expectations. We've won the largest deal available to the market this year. And together with orders secured earlier, this will support continued growth in our automotive business. This quarter, we announced a partnership with NVIDIA to create a clouds to car mapping system for high definition master cell driving cars. This collaboration is an important step for TomTom. In telematics, the installed base reached 671,000 subscribers for subscribed vehicle by the end of the quarter. And that represents a 29% growth compared with the same quarter last year. Telematics was recognized as Europe's leading and most innovative fleet management service provided by Birk Insight for the 2nd year in a row. This concludes my part of the presentation. I'm handing over to Taco. Thank you, Harald. I shall now begin a more detailed look at our financial results as already mentioned by Harold, our generated revenue of EUR 239,000,000 in the quarter, the is a 6% decrease compared with the same quarter last year. The decline was mainly driven by lower consumer P and D revenue, which was only partly offset by revenue growth in Consumer Sport, Automotive And Telematics. Licensing showed relatively flat revenue compared to last year. Our depreciation versus the euro with EUR 4,000,000 this quarter. Let me briefly discuss the business units 1 by 1. In Consumer, the P and D business declined faster than we expected. In Europe, market was down with 21% in North America, the market was down with 23%. Our market share strengthened in both regions. The sport category continues to grow with revenue doubling compared to last year in the quarter, however, it was not enough to offset the decline in P And E. Automotive delivered a strong performance with revenue growth of 21% year on year to 1,000,000. The increase is driven by higher revenue on our existing contracts and ramping up new contracts. Licensing revenue was $34,000,000 in the second quarter, flattish compared with the same quarter last year. Telematics revenue was up by 15% year on year to EUR 37,000,000. Recurrence subscription revenue for the quarter increased by 17% year on year to EUR 29,000,000. Our monthly subscription ARPU decreased year on year owing to the impact of the acquisition in Poland. Gross margin was strong this quarter with 60% and we're reducing our dependency on hardware, products by growing recurring data software services business. Total operating expenses for the quarter was 1,000,000 compared with 1,000,000 the same quarter last year. The year on year increase was driven by an increase in personnel expenses, partly offset by lower marketing expenses. We delivered an adjusted net result of 1,000,000, this quarter, which translates in an adjusted earnings per share for on a fully diluted basis. At the end of the quarter, we reported a net cash position of EUR 81,000,000 cash flow from operating activities for the quarter was $54,000,000, $7,000,000 higher compared with last year. This was mainly due to lower working capital utilization, partially offset by higher tax payments. The cash flow used in investing activities excluded, excluding the effects of acquisitions increased, to $32,000,000 in the quarter. Similar to last year. Then, over 2016, we're updating our guidance. We now expect full year group revenue of around 1,000,000 and the outlook for adjusted earnings per share remains at we expect the level of investments in both OpEx and CAPEX in our core technologies to be higher than last year. That concludes the formal part of the presentation. And operator, we would now like to start with Q And A session. Our first question is from Mark Kesselink from ABN. Ambrow. Please go ahead. Yes, thank you. My first question is on the auto order intake. Do you have a feel on, if your market share there is similar towards last year, so the all the orders that were out there, did you get a similar or did your winnings from market share? And also on the request for proposals that are out in the market, is it? Is there a visibility going into 2017? Will 2017 will there be growth versus this year or will it also be a bit more subdued like this year is versus last year? And my second question is on your partnership with Nvidia. What does it exactly mean? Does it mean that nvidia, if they use their computing power, that they will use your mapping technology and your localization technology? And what does it mean for the future for autonomous driving? Will it help you to be available to the market or will speed up the process? That's it. Yes. There were those were the questions. Yes. Yes. Okay. Thank you, Mark. This is Harold. Thank you very much. Market share, it's difficult to say. I don't want to give you a number of market share wins because we don't have reliable data. And there's no third parties either collecting a reliable data on total availability of, of deals, but we think we're doing okay and certainly no worse than last year. But I think it's also true that the total available, total fully available deals for 18 was lower than it was in 2015. So I think on the whole, we we are happy with the results. It's developed in line with our expectations. And, it's going according to plan. I don't want to give you indication for 2007 team at this moment, partly because we don't have that visibility completely. And second, because I want to give guidance in when we do the Q4 numbers and not now for 2017. Yes, the NPDI partnership, that's really interesting for us. So it's a partnership that that obviously needs to develop, but the idea is that we do, map compilation super real time in the car based on, the processing power that the NVIDIA platform produces the moment, we do a lot of course in the cloud. But given the enormous amount of data that sensors are collecting, it will be much more efficient to process that data in the car and only, move the digitized data from the sensors into the cloud. That is what the Nvidia partnership is about. That is what we're building. That should then also result in a highly accurate positioning product. In other words, if you use the NVIDIA platform and our maps in a row DNA, then the software developer for driving has a very good understanding of where exactly the car is, and that is critical to get the whole system to work. So an exciting partnership for us that we are developing now. It will involve exchange of technical information development. So we are excited about that and also what the technology can offer in terms of map making. It would greatly, improve the efficiency of our map making process if we get the technology under control. Okay. Maybe as a follow-up, is that deal with the partnership with Navidea as the exclusive? And would it imply that if Navidea wins an order for autonomous driving or any development on that does it mean that you're indirectly, you're connected to that as well? No, I don't think it will go this far. And I said at the end of the day, the carmaker decides, which technology he will use. And the partnership with NVIDIA is also not exclusive. That is, there will be atypical for the industry. But the fact that we're working together will help us in our commercial efforts, but also is helping us and we see that already in getting a more granular and deeper understanding of what's going on in the total is driving where the issues are and where we can play a role. Okay. Thank you. We will take our next question from Martin Lindber from NIBC Markets. Please go ahead. Yes, good afternoon, gentlemen. Yesterday, there was an exciting announcement as well from Tesla. Stating that its cars will be capable of level 5 autonomy with the updated hardware suite. I have just two technical questions, if I may. Do you think an HD map can be uploaded to such a vehicle over the air via Wi Fi? That's question number 1. And the second one is, do you believe it's technologically possible to achieve level 5 autonomous driving, with sensors cameras and a current automotive grade map. Not an HD map, but a current automotive grade map. First, can we, load a full HD map, on a system? Yes, you can. But there are limitations on the geographical size, of course. You can't load, probably the whole of the U. S, but certainly a very significant part of the U. S. Is, possible to load that and also to maintain that. It needs to be done in a clever way, but technically, that is possible as certainly not an impossibility. Second question, is what is the exactly the second question? Can you achieve level 5? Can you achieve level 5? Yes, can you achieve level 5 autonomous driving given that there are so many advances in sensor capabilities, camera capabilities, light are becoming cheaper. And a current automotive grade map because the industry seems to assume that you need an HD map. Well, I'm always, I'm a little bit torn between the mobile I view and the, let's say, the opposite view. So the, I think everybody's coming around if you do need that high definition map. And then for a simple reason that the the range of the census is just limited, in distance. You need some sort of, of you need 2 things. You need to know where all other objects are relative to the map also further away and you need to be able to plan your route further out. And for that, you need those high definition maps. And I don't think currently there are many people who don't think you need a digital map that. Just wanted to be absolutely sure. Thank you. From Francois Brevini from I have a couple, if I may. The first one is on the order intake still. Can you update a bit on the situation on the ISP and also the penetration of Indash. I mean, do you see, still increasing the penetration Also on the HD Map, what is the timeline? I mean, when do you think you will have contracts with HD maps and what how should we think about the pricing? And, the last one is on the your investments. So in OpEx and CapEx, can you give us a bit of color if you need to invest more? How do you think about the industry and to next year? If you can give some color would be great. Thank you. Yes. Okay. So, yeah, thanks for the question. So, ASP is an automotive relatively stable, I think that was your first question. It actually going up a little bit for us, but we need to do more So we need to provide map updates, often, software technologies compilation services, but on the whole, the price per car sold is stable and firming up a little bit. Penetration, I think, for the moment, we see is higher levels of penetration than before. I think, even in mid range, the attack rates are going By the way, the fact that we offer services with our map sales also means that we need to defer a proportion of our income. Under IFRS rules. So, you need to take it in a kind of way, look at the revenue numbers as well. HD Map, there is demand for the HD Map, but not yet for autonomous driving, but there is demand for the HD Map for better visualizations and standard navigation functions, which is, quite exciting for us because it gives us a way also to generate revenue from those early investments. So what you can do with an AG map is give a much more accurate representation, visual representation was going on around the vehicle, and that helps with building a clearer user interface that's easier to understand and gives the driver more special awareness So for those type of applications, we see some demand developing already. And then I hand over to Taco for the last question. Yes, the comments on OpEx and CAPEX in just to add to Harold's comments on deferral, as we have guided for automotive grow with roughly 20% this year. So then you'll end up at a bit north of 100 and 25. I expect the amount of deferral to be north of $30,000,000 only this year. So if you look at operational revenue, for automotive, you could add those 2 together. For CapEx, we've guided that it will go up this year. If you exclude Cap the acquisition CapEx we saw last year, we had $108,000,000 of CapEx last year and the guidance is that it will go up with roughly 15% to a level 1 to 5 for OpEx, we set a single digit increase I think it is, it's still single digit, but it is probably more in the 67% range for the full year. Any indication for next year, I would like to answer in a couple of months from now when we have seen the full results of 2016, and we have a better view of how 2017 will look like. Okay, thank you. And just on the HD maps, the timeline, I mean, do you think you're gonna from next year or in 2 years, the momentum as a development will translate into bookings or how should we think about the timing just to have an idea? Well, for self driving, you're looking into, not before any time before 2020, I don't think. And that's in line with what you read from, from the car makers when they want to introduce their self driving technologies. Okay. Thank you very much. And I think we also need to point out that in the Tesla case, what has been announced to equip the car with the hardware, not necessarily with all the software that's needed for level 5 self driving levels. I think that will take some more time. Okay. A question from Andrew Humphrey from Morgan Stanley. Please go ahead. Maybe a couple on CNDs if I may and then one off, I think, on CNDs, obviously you've seen this quarter, I wonder if you could give us an idea of how you view shorter term market prospects by which I mean over the next 2 to 3 quarters there. Are we looking at an issue with product cycle or is it a broader based market demand and what should we expect to see if you think over coming quarters And secondly, whether you can quantify, the impact that FX has had on ASPs versus a year ago? And then finally on mapping and automotive, and the deferred revenue that you're highlighting, it would be useful to kind of get a view of how you see that developing over the next year or 2 clearly there's a long lead time on these deals. And the deals that are being signed today, you might not start shipping units until 2018, 2019. So, clearly, we may see a couple of years with deferred revenue going up, if you could give us more detail on the dynamics around that, that would be great. Yes. So, yes, thanks for those questions. So P and Ds were weak. Especially in the last quarter with quite a steeper decline than we had anticipated. The market decline in, 2015 was actually quite benign with single digit numbers and that has accelerated a decline in 2016. And we expect, for the lack of further insight that declined to continue at 20% for the fourth quarter of this year. Probably also into the first quarter of next year. So the FX question I defer for Taco, but we've been hit by the by the pound obviously that has some has had some effect. Then automotive revenue, So what you will see over the coming years is that automotive revenue based on IFRS will increase. And that trend will continue. And that's based on the order intake of past years and delivery schedules that we're working towards that we're confident that will lead to, growth in the automotive revenue in years to come. When we, so the deferral of income has nothing to do with the introduction date. But that is when a car leaves the factory with our products, we charge a certain amount of money for maps and services and traffic but only a proportion of that revenue can be recognized in the P and L and a very significant think it's nearly 25% of that income needs to be deferred in line with IFRS rules and will then come through P and L in typically in a period of 3 to 5 years. Yes. So the So if you look at FX, it's mainly the sterling that had an effect. So in Consumer alone, the effect is, is roughly a bit north of $3,000,000 this quarter. The remainder is in telematics, south of 1,000,000, Automotive And Licensing not really impacted by, by sterling. ASPs in the P and D category year over year where, were flat or even a bit up. So it was the volume was the main driver or the only driver actually of the revenue decline. Thanks very much. Okay. We take our next question from Mark Wattenberg from ING. Please go ahead. Questions left. I want to first go back to the order intake. We've seen a number of 220 for 2014, a number of at least 300 for large year and now we are above 200. What I'm trying to understand a bit is I of course I under stand that there's less RFQs in the market that you can have a lower order intake, but I want to get a bit of a feeling what is a normal year on average, say, over an automotive cycle, in terms of number of RFQs. And if you would say, we have a stable market share in the RFQs should at an average say the last 3 years? Or should is it a totally no way of looking at order intake. Can you give a bit of field? Because I understand you're not willing to share the pipeline or the expectations in terms of RFQs for next year and wait for the full year results, but to get a little bit of a sense of how we should look to that towards the future, that would be very helpful. So if you could help there? Yes. So the by the way, the 200 that we published now, you is for the 1st 3 quarters and the 300 you related to was for the year as a whole last year. So there's still forces up. So just to be clear there. Yes. So the, of the size of the available market. Really, we've seen steady increase over the last couple of years in our total bookings, this is in terms of the total demand for our services or the addressable mark was not a great year in the sense that there was a lot on offer. But I think we are doing okay, in line with our in terms of what we can win and what we have won so far. I think that's the only thing I can say at this stage. No, of course, I understand that indeed it looks from a number of RFQs in the market that indeed your market share is probably even rising, but want to get a bit of a feel for what if it remains at this level? What is sort of a market in general over a longer period? So if you get your per share, is it that sustainable to have at least SEK 200,000,000 of order intake in a certain year? Is it because it's your order intake has been rising over the years, but maybe the underlying market was at that stage stable that you've been gaining market share just want to get a feel because we don't have the order books and the ARPUs and addressable markets for the past 4 years, but they want to get a feel for that whether the market as a whole has remained rather stable and that it's also a good proxy to impress for the next 4 years to come. Well, it's definitely true that we have been winning market share in the last 3, 4 years. Our order intake total has nearly tripled in the last 3 or 4 years, I think. So we are getting better. We are winning market share. What we have seen, of course, is here being now owned by the German car makers that will make it more difficult to win business from, German carmakers although not impossible, but we expect that the bulk of their orders will not be available to us But that also means that there are better opportunities for us to grow outside of that market and we are seeing that at the moment. There was a clear market win with Volvo, for instance, which we have not been serving in the past, And it was a very significant win, both financially, but also strategically an important step for us. To be able to get into debt account. And I think we will see more of that. We've seen last year Nissan coming way, which was a new one. And, and I think that, that will continue time will continue in 2017 and beyond. Sorry. Yeah. Is there any indication from larger OEMs, which are either client or not yet declined that are scheduling big model overhauls for next year? Because that's the natural moment that you would also up for a total overall of your mapping and infotainment systems. Is there anything out there that we can already see and that will bring an indication for next year's RFQ so that the year looks promising? Well, we have that internally, but it's we have those predictions internally, but they're quite warmly lumpy because there are indications, estimates from our side. We often see that things are not developing exactly in line with our expectation So I don't think it will be good for us to give you guidance on those, internal judgments I think it's that, that wouldn't be good. But I think generally speaking, what we're seeing is market share wins in the last couple of years. We've repeated that this year with the specific accounts. We're on the right track to continue to grow. Okay. And in terms of, your cooperation with Nvidia, would that also cause you're also in the test line? Would that strengthen your relationship there? Would it make an in route with Tesla? Can you give us any feel what the trend and the developments are with Tesla? Yes, I can't give you specifics on Tesla, unfortunately, but I think the fact that we are getting better involved in the North American market is a bonus for us with significant wins, not only with carmakers, but also with the tech firms what we showed you last year. But you do already provide some service to Tesla. Is that correct or not? I can't comment on that. Okay. And final one, SG and A, looking through your consumer segment and the shrink is there in PNDs. I assume that you will take quite some measures there to take out costs for next year. Would that imply that for next year, we now might end up in a high single digit OpEx increase given the current pipeline and automotive and the work you budgeted there, would it imply that it will for next year, at least look a little bit better on the OpEx line because you can squeeze out some costs from the Consumer segment. We're not going to comment on that. We want to wait for the end year results and to have internal planning finalized we'll give more guidance during our February results. So we shouldn't extrapolate the Q4 guidance to next year? I can't give any guidance on it. Okay. Okay. Fair enough. Thank you very much. Okay. Welcome. Thank you. Our next question is from Andrew Haven from Independent Bank. Please go ahead. Thank you. In terms of the HD maps. You have 200,000 kilometers map now and presumably you've done that to show your automotive clients, what you're capable of. For the next step, I mean, you've got obviously a lot of mapping that still needs to be done. Are you planning to do that by yourself? And is that feasible? Or are you very much looking for partnerships there? And then second question maybe on the sport segment. I was wondering how you build or differentiate your products there. I mean, in terms of the sport watch, initially you partnered with Nike and then you went your own route. But if we look at the outdoor watch now, the fitness tracker, and the action camera, there's in all three of those markets, there's very much an established player there. So how are you building building your position in those newer areas for you? Okay. Side. Yeah, we have done, quite a good coverage for customers to show not only our capabilities, but also for our customers to test and give us feedback on that product. So we can work on detailed specifications. At the same time, there's work going on to achieve high levels of automation. You also need to read partly the partnership NVIDIA is to achieve those higher levels of automation. We are hopeful that that map making process for HD Maps can be automated fully or at least to a very large extent. And with the new technologies, including the type of computers that NVIDIA is building, computer vision, artificial intelligence, deep learning, we believe it is possible to achieve my higher levels of automation, enhance efficiency than what we currently can achieve. So that's ongoing work. And we need to do that, of course, because Matson have a good enough and productivity is key metrics in the map making business, and we're working hard on that. So, does that answer your question, Andrew, on the moving side? Yes, just maybe one clarification with the NVIDIA partnership. At the moment, it's the Navidea solution that's going into your own mapping vehicle. So am I correct with that And then obviously there's a much more potential lift in the VDS solution starts going into cars with some sort of assisted driving. Is that the way to think about it? Yes, that's the way to think about it, yes. Okay. And what we offer the carmaker, of course, on the platform is is digital maps, high definition maps, but also accurate positioning, which is a, technically a problem for the market that needs to be solved. Okay, great. Thank you. Okay. And then on, sports business, you're right. There is competition and we're not the first of the market, but we are quite happy with the progress we're making I think we're building a nice ecosystem of applications, websites and devices that has, great potential. Not only for today's type of applications and but also has more to do in that space. And the link from sports to, well-being, potentially health can be further developed. We're happy with the progress. We're happy with the stickiness. We see that customers actually using our products for a long period of time, interacting frequently. We're building up a lot of knowledge and statistics and data that we think will help us Okay great. Thank you very much. Next question comes from shyam Kumar from TT International. Please go ahead. Hi, Harold. Can you talk a bit about, I guess, ADAS the middle road between map to navigation, self driving cars, which you said is a 2020 type phenomenon. When will that stock, when will ADAS stock to impact the business in terms of the size of orders coming through and in terms of revenues, And secondly, does the HD Map help facilitate more advanced ADAS capabilities as well? And thirdly, how much more do you make when a car is sold with some with ADAS component, please? Yes, so ADAS is, is there. ADAS is real. It exists, and we're selling it. And ADAS is used in various applications. So including, motor management, breaking, you know, and there's a whole range of applications electronic horizon and there's a whole range of applications where ADA's data are used for. We're selling that already. And that commands a premium over a non ADAS enabled map. And the premium needs to think about 15% to 20%. Okay. The way to collect ADOS features is very much, in the same way as we get to the HD map. So wherever we have HD coverage the ADOS attributes that we have are a not a free byproduct, but a very cheap byproduct of our AG mapping efforts, which we have been able to automate to a very high degree at this stage. Okay. So it's not free, but aid as an HD are very closely linked. And when you have HD, you also have ADAS attribute Okay. But in terms of your current standard map, it's sufficient to obviously deliver ADAS as the technology is at this current level? Yes, it is. Okay. And what's the kind of penetration rate of ADAS sales and how fast is it growing? Because I imagine it's quite a low penetration technology at the moment. That's right. It is early days, but it is becoming mainstream. And we can see that from the RFQs and the RFI that we're receiving So you will see a fast uptake of ADAS features in the higher segment in the mid range segment in the coming years. And that is, that's going to be mainstream in volume in 2017. Maybe 2018, 2019. So in terms of when will the benefit of that, I guess it will first speed into your order book before it feeds through into your revenue base, right. So when would that start benefiting the order book, please? Well, you can see it already in the 2010, this year, there is not all of those contracts we've done are including ADAS but there is some contribution from ADAS features in the order book for this year. Last year, the same thing sort of my mid reach percentage, but I do know that we did sell or took orders for ADAS features in 2015 And now again, in 2016, I think the penetration for ADAS will go up in Q4 and in the years to com. Okay, perfect. And can you talk about, and so when you said the penetration of ADES goes up, you mean in terms of that coming through the orders or in terms of the revenues? Both. Okay, fine. Okay, perfect. And in terms of licensing and telematics, licensing has obviously gone flat this year. Any kind of interesting growth drivers on the horizon there? And also on telematics, if you can just kind of give us some comfort as to why a kind of double digit growth rate is sustainable going forward and what are going to be some of the key drivers there, please? Yes, I think for for licensing, we work on some interesting things, but I think it's too early to give you more indication of what I will mean for the P and L. But there are new opportunities opening up. And that's also driven by the fact that a lot of companies who use location based services don't feel comfortable with the current vendors. So I think there are opportunities there. Bit early to talk about it in more detail on what I can do now. Telematics, I think, is there's some exciting stuff going on in telematics. So we're working in the last years to kind of sport a world of both UBI, so user based insurance, but also, connected car services for other than fleet management. And I think both those opportunities will start to materialize in 2017 that will start to contribute to, to growth in a segment that we didn't offer before. Okay. When I say connected to car services, you need to think about leasing companies, dealer organizations, and insurance companies who want one way or another want to get data out of this vehicle to use for a variety of purposes. We see that as a trend. Those are typically deals where ASPs are lower than for web fleet, where the value add is higher, but there's also significant volume involved. We've learned a lot about that segment. And I think 2017 will give first indications tangible proof that we are penetrating that market with our portfolio. Perfect. And just last one, in terms of, I guess, the consumer and the hardware business, Given the growth in the software and services business, is there any logic to separating out that business and maybe disposing it or doing a management buyout with the divisional management of that business? I can't speculate on that, Shimon. Okay, fine. Okay, that's great. Thanks, Harold. Yes. Thank you. Thanks, Shyam. I would like to thank you all for joining us afternoon. We are closing the call. If you have any questions, please do not hesitate to contact the IR department. Operator, you can close the call now. Thank you. Ladies and gentlemen, just to confirm, this now concludes today's conference call. Thank you for your participation. You may now disconnect.