Earnings Call: Q4 2015

Feb 9, 2016

Good day, ladies and gentlemen. Welcome to the TomTom Fourth Quarter and Full Year 2015 Earnings Conference session. Call. Please note that conference is being recorded. Relations. You may begin, madam. Thank you, Hannah. Good afternoon, and welcome to our conference call during which we will us our operational highlights and financial results for the fourth quarter full year 2015. With me today are Harold Houdain, our CEO and particular, TomTom's CFO. You can also listen to the call on our website and a recording of the call will be available shortly afterwards. And as usually, I would like to point out that Safe Harbor applies. We will start today's call with Harold who will discuss the key operational followed by a more detailed look at the 2015 financial results and the financial outlook for 2016 from Taco. We will then take your questions. And with that, Harold, I would like to hand over to you. Thank you very much. Be zero. Welcome, ladies and gentlemen, and thank you for joining us today's earnings call. We delivered top line growth in 2015 for the first time in 5 years. All our 4 business units delivered revenue growth in the 4th quarter 2015 revenue was over 1,000,000,000, which is 6% higher compared with last year. The weakening of the euro impacted our profitability negatively in 2015 nevertheless we delivered on our guidance. The net result for the year was million, which translates to adjusted earnings per share of Taco will provide further information on the financial highlights and the financial outlook for 2016 later during this presentation. I will now discuss our key operational highlights per business unit. Let's start with the Consumer business. Our Consumer Drive products held up well in 2015. Thanks to a resilient P and D category and the introduction of niche products Our P and D business developed better than the market this year. We maintained our leading market position in Europe, improved our market share in North America, and strengthened our average selling price strong value from the P And D category, which we believe will remain a sizable category for the foreseeable future. Our sports products revenue grew strongly this year. We launched a 3rd generation QPS SportWatch in Q4 with integrated music player, building a heart rate monitor and 20 fourseven activity tracking. We were pleased with the acceptance of those new products, which resulted in a significant year on year increase in sales. We entered the action camera market with the launch of the BANDID is the first action camera with a built in media server. We will continue to bring new innovative products to the market in 2016. Automotive broke the 2014 record for new bookings, which exceeded 300,000,000 in 2015. This, together with order secured earlier, will deliver revenue growth in our automotive business in the coming years. The level of bookings is substantially higher than in previous years and is a good indication that we are growing faster than the market. Our renewed portfolio delivers navigation software to the automotive industry that is easy to integrate and delivers a much improved end user experience. Our business will continue to require high levels of investments in the near future and this is needed to support delivery of announced that BMW has chosen our traffic information in Russia, Australia, New Zealand. The service is available cross car line as part of the connected drywall BMW. In addition, Dave Mercos, our navigation service for its new Mercy's ME app. Our Licing business unit announced a multiyear deal with Uber in the first quarter to provide Maps and traffic data. For the Uber driver application. Let me now give you a quick update on our maps. We completed the move to our new mapmaking platform by the end of 2015. This platform is the first of its kind in the industry and leap forward in mapmaking technologies. With our new platform, our map is updated continuously using transactions with automatic quarterly checks. An update will become available to consumer applications as soon as the transaction was completed. This dramatically reduces of time, which contains detection and publishing a new map, which we can also do incrementally to deliver real time maps. Some customer applications as is automated driving plays a high premium being up to date with the latest real world changes. New technologies are in development that rely on artificial intelligence and deep learning that have the potential to automate immature technician and automated map making. Our map making platform is designed with the emergence of those technologies in mind. In combination with existing map making technologies, this will bring us the scalability that we need to make the maps for autonomous driving in a cost effective way telematics business continued to perform strongly. The subscriber installed base passed the 600,000 vehicle landmark by the end of the year and delivered a 30% growth compared to last year. This was achieved through a combination of organic growth and the acquisition of Feiner, which is the leading fleet management service provider in Poland. Today, our telematics business is recognized as the largest and fastest growing telematics provider in Europe and our established and scalable technology platform in combination with our ongoing commitment to innovate, sustain investments in R&D and operational leverage enables us to continue technology can deliver is also opening up new opportunities for aftermarket connected car services. This last judgment completes my part of the presentation, I'm handing over to Taco now. Thank you, Harold. On Slide 6, I shall now begin a more detailed look at our financial results. We generated revenue of 1,000,000 in the 4th quarter, an increase of 9% compared with last year We saw growth coming through across all of our 4 business units in the quarter. In 2015, We delivered revenue of over EUR 1,000,000,000. This is 6% higher compared with last year. Our licensing telematic and Consumer Sports Businesses contributor for the group. Consumer revenue 1,000,000. This is a result of a resilient P and D business and a 40% growth in our sports activities. Automotive revenue delivered a modest decline in 2015 due to the phasing out certain legacy contracts in combination with the higher share of deferred revenue compared with last year. Our order book is good is a good leading indicator for future growth in the segment. As Harold already mentioned earlier, our order book for this year is about $300,000,000. If you compare that with the $220,000,000 over $214,000,000 and the $130,000,000 over 2013, you can calculate a CAGR of 50 percent over this period. Licensing revenue was up by a 27 year, or year to 1,000,000. This increased throughout the years, driven both by existing accounts as well as new accounts like Uber. Telematics revenue was up by 22% year on year to 1,000,000, this increase was driven negatively in 2015. On a full year basis, our gross margin was 52% to 55% last year, FX and an impairment charge of 1,000,000 related to certain automotive customers specific software impacted our gross margin negatively. At constant currencies for the U. S. Dollar and the GB, pound Our gross margin for 2015 would have been 56%. OpEx for the year amounted 1,000,000, which is 1,000,000 above last year. This increase is driven by the growth of our workforce and higher marketing which is partly offset by a decrease in D And A and a 1 off gain from a settlement of a litigation case in Q2. We expect the run rate for OpEx in 2016 overall to be up to what we've seen in 2015. We delivered a net result of 1,000,000 this year, which translates in adjusted earnings per share of on a fully diluted basis in line with our guidance. If you add the movements in our net diverged revenue and divert console sales year on year of close to 42,000,000 take off 25 percent corporate income tax and divide by the total number of shares, it would add 14 to our bottom line. We generated volume to EUR 90,000,000 cash flow operating 50s similar to last year. Capital investment equaled to EUR 55,000,000 in the quarter, and EUR 154,000,000 for the full year 2015. If you strip out for acquisitions, our CapEx have been 107,000,000 in 2015. The majority of the investments related to the 2 acquisitions we made this year as well as investment in our new transactional map making platform, our navigation software and some customer specific investments we had to make in automotive. We finished the year with a net cash position of 1,000,000 compared to 1,000,000 last year. Let me conclude with Slide 7, our full year outlook. We are committed to deliver revenue and earnings growth in 2016. We expect revenue of around 1,000,501,000,000 the adjusted earnings per share is And we expect the level of investment in both CapEx and OpEx in our core technologies to be higher than what we saw in 2015. That concludes the formal part of the presentation. Operator, we would now like to start with Q and you. Our first question is from is open. Good afternoon. I wanted to ask about the autonomous driving opportunity and more specifically, the announcement earlier this year by Mobileye. In their presentation at the Consumer Electronics Show, they were basically talking about 2 camps in autonomous driving with you and here in one camp and then in the other camp. And well, the way I understand it, it seems there are basically, 2 alternatives to get to autonomous driving So what I would like to hear is, what do you think? Do you think what they are offering is a substitute or an alternative to what you are offering Or do you think the offerings will be complementary? And then I have a follow-up. Yes, that's an interesting question. The we're definitely building, different products. So apart from so we have, of course, we have the street names and the house numbers and the POIs And on top of that, we're building a layer of lane information. For us, that's an addition for Mobile I that seems to be their core product. Now the way we construct that, additional layer is, of course, something that we are fully experimenting with. We see all potential new technologies that do automated, recognition, image recognition, video recognition, and find ways to on a large scale to produce that data as an additional layer on our existing map data. So I think that is the way to look at it. I think the interesting thing for Tom is that we already have an awful lot of data, of course, that you can't capture automatically, but also that our map making platform is designed to ingest and fuse that data that we can collect in a highly automated way in the future as part of our core database. But listening to their presentation, I caught the impression that with their approach you don't need a very sophisticated map. Would you agree with that that view and do you see that as a potential threat to the autonomous driving opportunity for TomTom? No, I think it is important. There are important developments taking place, technological developments, artificial intelligence, deep learning, neural networks that have the potential to capture the data on a large scale at a very cost effective way. That is where we're focusing on. Okay. Maybe follow-up on R&D spending. I understand R&D will be up in 2016. But if you look beyond 2016, is there a chance that eventually R and D spending will start to come down? Or will you have to keep on investing in R&D to keep your maps up to date and things like that? No, we see, of course, we see the moment that we get real operational leverage coming through, we see that coming. You have seen that our order intake in the automotive industry is growing significantly, we had higher licensing income that will result in the years to come in higher revenue and the additional expenditure in, in Matson Technology will be lower than the revenue increase. So we will see a situation where we do get that operational revenue leverage and higher levels of profit falling through to bottom line. But that will have to come from top line growth, not from a drop in R&D? Well, it will come predominantly from top line growth. But also, there's a lot happening in the way we make maps. We have an ambition to do that in a more automated way, do that lower cost and more scalable, we are now in a position where we can actually start to work new methodologies. We don't know exactly how fast that will go, but we are planning for significant productivity gains, in the future. I don't think you will see that coming through in 2016. Those productivity gains which certainly in 2017, we should be able to get the full benefits of the deployment of those new technologies. Okay, that's helpful. Thank you. Our next question comes from Andrew Gardiner from Barclays. Please go ahead. Good afternoon. Thanks very much. I had another question on the automotive side. You're seeing good growth on the order front this year and you're sort of giving us a annual or biannual update there. I was just wondering after what we've seen in 2014 with over 220 that grew to 300,000,000 in orders last year. Can you give us a better idea as to the timing or phasing of your backlog now and how much sort of these last 2 years' worth of orders are going to be contributing to this year's automotive revenue or next year and year after just to try and get a better sensors to the, the path of growth there? Yes. So let me take the answer. So the orders that we take in, are, have a duration of anywhere between 3 to 7 years, I would say. And probably I think the sweet point is probably somewhere between 3 to 5 years. They will start after 18 to 24 months. But before they are properly ran up, you are looking at 30 to 36 months or 2.5 to 3 years before you get the real volume in those contracts. So it's a bit of a puzzle, but that's the way to look at it. So I mean, if I sort of ask it another way, I mean, since you had sort of refocused the automated strategy and gone to sort of the more productized or modular offering, we're still even in 2016 not seeing much of the revenue that is really going to be 2017 and beyond from most of the last couple of years of orders? You will see some of it coming through in 2016. The pickup in Q4 this year, the automotive revenue was a kind of a heads up for that to happen in 20 16. Okay. And then just a quick follow-up around automotive. The impairment or write off that you saw within COGS in fourth quarter. You mentioned it was sort of related to specific customer technology or customer software. Was this a legacy product or is this one of the newer ones perhaps hasn't gone as you anticipate? This was mainly, this was mainly legacy automotive, related, yes. Okay, alright. Thanks very much guys. Our question comes from Martin Dindrever from SNF Securities. Please go ahead. Was wondering if you could elaborate a little bit on the increase in the hardware automotive revenue because for a couple of years, that revenue line has been in decline. It's up this year. I was actually, really interested in hearing what has caused the increase. And the second question that I had, well, let me wait for your answers first. Yes, but I don't think the hardware of new wind up maybe there was a bit of dollar effect, product mix, but generally speaking, automotive hardware was relatively stable, I think, year on year. Yes, for the full year, you saw, as a bump up in Q4 that is think that's more Q4 2014 related than the 2015 related. If this is only declining, Paul, you will, there's a bit of a mixed bag of contracts in there as some contracts have a higher ASP than others. And if you all add that together, it was indeed a strong performance in the fourth quarter, but nothing that you should extrapolate Now, so the decline in 2006 will be more in line with what we've seen in previous years, or will it actually accelerate? Yes, it will go down. It will, yes, I mean, we haven't seen a decline this year. So it was but for 2016, it will go down. Yes. And then going back to the deferred revenue component, actually mentioned to yourself that it was around 1,000,000, the net change. On the P and D side, all of the models have lifetime map lifetime traffic. So I guess that, that will not have such an impact in 2016. Am I right in that understanding? So, I don't think we're completely over that all the malls have lifetime maps and high lifetime traffic, but more and more indeed. That's true. For 2016, we still expect some deferral of consumer business, but it will indeed be lower than what we've seen this year. I think the where we expect the most deferral to happen is in the automotive line in 2016. Would it be possible to give any indication of what the amount would be roughly ballpark figure? Is it the same type of area or should it be much less just to get a better understanding. The way to look at it is that the net deferral is likely to be a bit lower than what we've seen this year and that, that the main contributor to the deferral is will be automotive this year compared to consumer last year. Kesselink from ABN AMRO. Please go ahead. Yeah, thank you. First question also on Automotive. Remember from the last call, you said that you're reading market share. I can remember you said it in your introduction. How do you see the market on the take rates of the, of the inbuilt system is the pie, is that also starting to accelerate already And the second question is on your incremental investments, partly ahead of the 1 contracts. Can you talk a bit more about the your decision behind it? Is that you saw the opportunity now to speed up this to make sure that you're ready for clients? Or is it also that you had to repair your products on some white spots? A bit more on your ID from is this, was it opportunity to grab there? Take rates and do the investments? Yes. So the take rates are for your Automotive industry are going up. They're still relatively low. I think industry number is around 27% of take rate for 2015. We continue to see that we expected that take rate will continue to grow, in the next 3 to 4 years. Yeah. And on the investments, so if you look at our OpEx, and also CapEx, but let's start with the OpEx. So we we the OpEx was roughly 5 520 in 2015 regarding to an increase of a high single percentage of, I don't know, 8 8% or 9%. Where that OpEx increase will come from. It's on one hand, it is telematics telematics is growing as an business unit. It has now more than 600 people in the payroll also because of the they did at the end of last year. So the run rate, of course, in that organization is going up, not that the expense margins, as you can see in our press release, so it is the profitability is intact. But the base baseline is going up then, the other thing that we are doing is that we're investing more than what we have in our Mets organization that has to do with deepening, expanding our reach in geographic fleet, we're getting new customers in, and, yeah, we think this now is the right time to further improve the product that we have. In the CapEx area, you see, similar investments. Investments will continue in our platform. We need to harden that further We moved. We went live at the end of last year. We moved to this new platform, early this year. But that will, will need continued investment. I think that the pickup that we've seen from 15 to 16 is, is I understand that that, that is what it is. But on the other hand, I don't think that it will continue to grow that level in the years after 2016. So I'm not saying that it will go down, but especially in some areas, we can already seasonal operational excellence coming through. Okay. Maybe as a follow-up then on the part on the automotive, the increased investments there. Something you look at it like also from a payoff perspective, this will start to payoff in the next few years or Yes, this will start to pay off in the next few years. Yes, some of these contracts are, things that we can sell, relative fee without any modifications and some complex require additional investment from our end, and we're happy to do that, but that will mean that these we have to incur in a form before we can sell the portal. Okay. Thanks. Our next question is from Andrew Humphrey from Morgan Stanley. Hi, thanks. A couple of questions, if I may. One is around I guess, the automotive product more generally on mapping. You obviously have the platform in place now for real time updates. Which is clearly something that your partners need from you. Can I ask whether you are starting to see or are in at any point, a degree of increase in pricing power resulting from the technology changes that you're making there And my second question is around, I guess, the shape of OpEx beyond 2016? Obviously, I'm not expecting you to give guidance on them. But if you could give us an idea about whether the 2016 increases OpEx we'll see are likely to be repeated in 2017 or whether you believe that that step change is something that will set you up for the next few years in terms of the amount you'll need to invest in in your newer businesses Let me first take the, the question about pricing power you. So I don't think our pricing power as such is going up, but we have more to offer instead of selling a one off map, we now can sell or license a map plus an update service for a number of years. We can also license traffic information. We have a strong product offering there already. We estimate that our market share in Europe is about 80%. We think that we will be able to increase our market share in North America significantly to come and use. In fact, in 2015, we've won an important traffic contracts for North American market. And thirdly, our navigation software is now, we've been in a transition. We've defined new map formats. We have adopted our navigation software to those new map formats. We have developed incremental net update services. So there is also on the software side, more that is now really competitive in state of the art, and for us, we can successfully sell that we couldn't sell let's say, a year or 2 years ago. So I'm not saying that the the products themselves are getting more expensive or that their pricing power is increasing, but I do think you have much broader, much more competitive portfolio and service portfolio than we had, let's say, a year or 2 years ago. And that eventually, will lead to a higher revenue per car than just, let's say, the standard map that we typically sell in the past. And just to kind of follow-up on that, your real time update service that you mentioned that you're now able to sell to Autos customers. Are you able to price that separately from the core map at the moment? That comes as a separate component as an update fee that we typically sell for a period of 1 year or 3 years or 5 years depending on the requirements of the customer. Okay. Thank you. And just on the shape of the OpEx beyond 2016? Yes. I touched on that, with my previous answer a little bit, we think that we the OpEx levels that we're reaching in 2016, is there they are about for the mid term as well. So the increase of the high single digits percent is not something that we see repeating in the years Our next question is from Hans Slope from Largo Bank. Please go ahead. Yes, good afternoon. Two questions. Versus on the automotive business, what kind of sales level would be needed to make the automotive units breakeven? And also based upon your backlog, which year could we expect EBIT profitability for TomTom Automotive? That's the first one. And second one is on your telematics business. What are the main geographical white spots for your telematics business? And should we continue to expect base? Yes, Hans, the, the, so profitability for the automotive business is, of course, that is a that depends how you look at that. Automotive business itself, of course, is a big contributor to to cover our cost base for map making, but so is licensing. So if you look at the common of licensing, automotive, map making, that's probably a good way to, to assess how profitable that part of the business is. At the moment, that's not profitable. But we can see that with the increased order book and resulting increased revenue based on the year, the bookings, of course, 2015, we can see that improving quickly. Yes. So if you look at in the press release as well and if I add to what Harold was just saying, if you take the revenue of Automotive And Licensing together in 2014 and then look at the combined EBIT of those 2, then the we see the right trend the trend is that the top line is growing, but also the EBIT, the combined EBIT of those 2 units together is, is is getting less negative. When we will breakeven, I don't want to give hard targets to that, but one thing that we want to achieve is that we need to continue the trend of, a better bottom line. Then when you have questions about telematics, about the white spots that we see geographically Yes, I think it's fair to say that that's a management business, but obviously a European business. We try to be a number 1 or number 2 in the various markets in terms of market share. We're well on our way to achieve that, for most countries in Europe. Our efforts will be, to integrate the acquisitions we've done in the last 2 or 3 years that going well. I think the Spanish acquisitions are fully integrated. All customers have moved. Legacy technology has been put out of operation. There's still work to do for the French and Dutch acquisition that's happening this year. And of course, finder acquisition will take some time. It's a relatively big one with 60,000 cars. So the focus is to keep selling, with an emphasis on, Europe. Continue to gain market share, go faster than the market and then integrate the back end of all those operations that will take a number of years. If there are other opportunities, we'll look at them for acquisitions But it's fair to say that this is done on a case by case basis. Our next question is Hi, there. It's Anna from Kempen. Thanks for taking my questions. First of all, maybe you can elaborate a bit on the phasing of OpEx and CapEx throughout the year. So, is there any important marketing campaign or R and D plan, which we need to take into account on modeling the quarterly numbers? Secondly, maybe you can help me in better understanding your sales guidance for 2016 because fiscal finder already contributes probably around 10 50,000,000 to sales and implies that the underlying increase is probably only 33,000,000, which is relatively slow growth for the remaining business. So what are the moving parts to get to an, to the $45,000,000, $50,000,000 increase for sales for 2016, which implies quite a slowdown versus the growth seen in 2015? And then finally, a question on the working capital, right, and positive contribution in the final quarter of last year? Is it a structural thing or should we expect the release in the coming quarters? Okay. So facing CapEx is very simple. That is, so our guide, so we look at the CapEx 2015, if you strip out the acquisitions, we made the it is $107,000,000. The guidance for 2016 is roughly 130 and that is a fairly equally divided over the 4th callers. For OpEx, the OpEx is traditionally a bit lower in Q1 and a little bit higher in Q4. So that's the way to think about it. Then what was your next question was the revenue? So revenue of 100 and 50, divided by 4 business units, which think here is that consumer licensing will stay fairly flat. Automotive, we'll see in the growth of high teens and telematics helped by the acquisition of Feiner, indeed, of roughly $10,000,000 of revenue will add mid-20s of, for revenue growth. Then your last question about working capital, could you repeat that question? Sorry. It was quite or at least it wasn't a positive contribution from the release of working capital in the 4th quarter. I was wondering is it a of thing? Is it sticky or is it likely to release part in the coming quarters? That is Yeah, that has to do. I mean, a big swing factor for working capital in Q4 is always the time that we sell in and when we collect our money from retailers. So, that is not something that that we could easily model or repeat for next year. What I can say is that our aim for 2016 is to generate cash flow to be, to generate free cash flow. That's the only guidance that I can give. Okay, very helpful. Thank you. Our next question is from Francois Bouvignies from UBS. Please go ahead. Thank you for taking my question. I have 2 So the first one is how confident are you that booking will transfer it to revenues? I mean, what is the conversion rate historically. And can you give us a split between Matt's traffic and navigation by any chance? And I will have a follow-up, if I may. Yes. So your first question is conversion rate between bookings and revenue. So how confident are we that if we make the booking that the revenue would also come, right? Exactly. Yes. Yes. I mean, I haven't experienced. I haven't seen that many cases that, that things get canceled. What you will see is that things might get delayed, and that carmills go to market a bit later than originally planned. But on the other side, there's also a lot of upside. There's often a lot of conservatism in the volumes, that are put in the orders or the, the quotations. So, I think it will, will balance each other out and the net effect will be will be positive if any. Okay. And can you give us a bit of Maps traffic and navigation in the bookings for 2015? No, we can't, but what we can say is that the lion's share is, is maps. And then probably traffic and then navigation. Okay. Thanks. And then I have a follow-up on telematics. Are you working also or looking at new application because you are focused essentially on the fleet management. But are looking also on the insurance size, for example, can you update a bit on this? Because I believe you have a partnership with Allianz, for example, in France, So it would be nice to have an update here. Yeah. So the, yeah, you're absolutely right. So the, our core priority is fleet management. That is typically sold to fleet owners who want to operate their fleets cost effectively or to higher level of quality standards But new ways of, new tighter data tapes are also interesting. So insurance is a clear one It is a market that's grown for us. This is lower ASP, but potentially higher volumes. We haven't seen massive breakthrough in the deployment of, user space insurance, but at the same time, it's growing steadily. So, it's happening. There are other things that we're working on. In the context of the connected car, we're working with the a large distributor here in the Netherlands, who is equipping all their vehicles with a black box and are collecting data and make that data available to their own dealer organization to the driver potentially to a lease company And if the user of the car desires that the debt can also be used to apply for an insurance quote, So there is a lot of movement there and a lot of new opportunities for new value added services. And we are in the midst of all that. A lot of that is experimentation, but also some real commercial contract that we are, that we are installing at the moment. Okay. Thank you. And you don't have any timeline about when it will happen for new application to come through? For them? Well, some applications are now fully commercialized. So the Dutch VW importer, for instance, up and running. That is a commercial product. We expect that it will ramp up in 2016. Contracts as Allianz and others are also real and are growing in guidance. Our next question is from shyam Kumar from TTi International. Please go ahead. Hi there. Just in terms of the the auto order backlog, which I know you said is kind of 50% CAGR the last few years. Given where we are in take rate in some of the new technologies. Can we expect similar ish kind of growth rates going forward, please? First question. Yes, it's difficult for me to cover that. We don't give guidance for the order intake. It is, it's also quite difficult to give you a good occasion. It's going to be lumpy. We don't know exactly. We have a reasonable visibility of which contracts are up for grabs this year, but we don't have the full picture. Because carmakers have made their intentions clear to us. So it's difficult to comment on that. Okay. Fair enough. And moving on in terms of here having gone to the German, any thoughts there in terms of how that or not affected your competitive landscape and also in terms of your ability keep winning contracts with the German? 2nd question. Yes. So the, it's so it's clear that that we have been able, at the back of the announcement about here, we've been able to renew and intensify our contacts with a wolf carmaker who we did have a relationship with, but are reinvesting in their relationship looking at the new technologies that we're deploying, a lot of interaction at engineering level to look at, at what we have to offer, I think that will help us to continue to win deals in 2016 2017. I don't think the simple fact that here is now owned by the Germans is good enough for us to win business. But, what we certainly see is that there is a higher level of interest and also investment on the OE side to have a look what's happening at TomTom. And those, those due diligence sercises are going well. So the engineers are impressed. How far we've moved on, the state of our technology, our vision of how this will evolve over time. And I'm, that, that will lead to further deals and further contract wins in 2016 and beyond, especially with carmakers where traditionally don't have a very strong relationship with. Okay, perfect. And it's not precluded you from winning contracts with the German themselves because you won that contract with BM in Diamond? Well, that remains to be seen. We are invited to RFQs. We have our commercial operations with the German carmakers, full steam, but how they will develop their relationship with here Tom, Thomas, remains to be seen over time. Okay, perfect. And last question, coming back to Peter's original question in terms of mobile eye and I guess just a creating a database space of landmarks using visual technologies. Do I understand you correctly? And you're sort of saying that stuff is a layer. It's a further layer of complexity on top of the mapping products that that you both deliver? Yes. It's an addition that we see that very much as an additional layer. Okay. So it's not really that works seamlessly and is fully connected and, with, with, let's say, standard mapping products. Where you find all the street names and the house numbers and the POIs and all the other attributes that we have. But by itself, it's not enough to sort of deliver an autonomous driving solution without having the underlying mapping platform as well? Say it again? But by itself, just a visual product like Moverlay or the like is offering is not to deliver an automated driving solution without having the underlying, mapping data there. Is that correct? Well, that we made to be seen. We are all experimenting, carmaker experimenting, we are experimenting, we're all looking for the right combination of data senses and software. So it's a race for the future. They're very, schools of thinking. Various things are working well in daylight, but I'm not so good when it when in the dark or when the sun says low, so there's a lot of work going on. But I guess it's not clear, not clear what the what eventually the the right solution or right combination of technologies will deliver that autonomously driving comp. Okay, perfect. Okay, Hal. Thank you. All right. Thank you, Shyam. That was the last question for today. I would like to thank you all for joining us this afternoon. If you have any follow questions at a later time. Please don't hesitate to give us a call. Thank you very much and operator, you can close the call. Now concludes today's conference call.