Earnings Call: Q1 2015

Apr 21, 2015

Good day ladies and gentlemen. Welcome to the TomTom First Quarter 20 15 Earnings Conference Call. At this time, all participants are in a listen only mode. We will be ask questions. You. I will now turn the call over to your hostess for today for today's conference, viscera Groovecic, 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 first quarter 2015. With me today are Harold Hudane, our CEO and Marina Wyatt, our CFO. Or you can also listen to the call on our web 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 developments followed by a more detailed look at the quarterly financial results from Marina. We will then take your questions. And with that, Harold, I would like to hand over So welcome, ladies and gentlemen, and thank you for joining us on today's earnings call. We have started the year in line with our expectation we generated group revenue of EUR 205,000,000 in the quarter, which is flat year on year. We reported a gross margin of 50 4%, which is 3 percentage points below last year. The weakening of the euro adversely impact our first quarter results. At constant currency rates for the U. S. Dollar and a British pound, our gross margin and operating result relatively flat year on year. Marina will provide further information on financial highlights and the financial outlook for 2015 later during this presentation. I would now like to discuss the key operational highlights for business unit. The Consumer Activities held a well in the first quarter through a combination of resilient P And D market and strong growth in sports products. We saw a unit decline of 8% in the European P And D markets, whilst the North American market declined by 17%. Market share in Europe remained broadly flat, whilst we continue to strengthen our ASP. We saw market share improvements at the end of the quarter in both regions. We continued to see strong growth in our sport business and we doubled the number of outlets in Q1 globally. We also added Mike plus to the list of platforms available to the TomTom GPS Sportswatch enabling to our user to check their progress and share their information with the NAC plus community. Our fleet management business grew strongly in the first quarter. At the end of the quarter, telematics reported an installed base of 482,000 active subscribers, which is a 39% increase year on year. Our Automotive business contracted as anticipated, a newly booked business continued at levels, which will support a growing business. In the quarter, we announced an agreement to deliver maps to Volkswagen in North America, We also continue to expand our position as a premium traffic service provider in the automotive market. We announced that we will deliver our real time traffic services to Volkswagen hyundai and Kia in Europe. We extended our global partnership with Fiat to deliver maps and navigation in Latin America and we also announced a new deal with South Korea's Changyou motor company. Our maps and navigation software will be included in your new Tivoli model at Europe in the beginning of May 2015. Good progress has been made with migrating our databases, our free databases to our new mapmaking platform. This new platform technology is fundamental to our future and will transform our digital map process of a quarterly patch process to one in which our map is continuously releasable and that can swiftly and automatically process sensor and crowdsourced data. The new platform allows us to process a variety of external sources for priority and from our strategic port partners at low cost in near real time. We are well on track to fully replace our mapmaking platform in the second half of this year. This concludes my part of the presentation, I'm handing over to Marina now. Thanks, Harold. I'll now go through our quarterly financial results. So we generated revenue of €205,000,000 in the first quarter, which was flat compared to the last quarter last year. Our telematics licensing and sport businesses grew strongly, and they broadly counterbalance the reduction in PMD and automotive revenue. Consumer revenue was 1000000, which was 3% down compared to last year. And this was caused by lower PND and related content and services revenue, which was partly offset by strong growth in sport. Our Automotive business generated 1,000,000 in the quarter, down from 1,000,000 in the same quarter of last year, and this decline was caused by the phasing out of certain older contracts. Our licensing revenue is 1,000,000 the quarter, which was a 12% growth compared to the same quarter of last year. And the year on year increase was mainly caused by higher traffic revenue, and to a lesser extent by FX. Telematics revenue for the quarter was 1,000,000, which was a 24% increase compared to last year. The recurring subscription 2% year on year to €23,000,000. Our monthly subscription ARPU decreased slightly year on year owing to the impact our first quarter results. This is reflected in the lower profitability levels, which we have reported, the gross margin was 54%, which is 3 percentage points lower compared to 57% in Q1 2014, and this is basically caused by the FX movements. At constant currency, for the U. S. Dollar and British pound, our gross margin and operating results were relatively flat year on year, and revenue was slightly down. Operating expenses for the quarter were 1,000,000, which was slightly below the same quarter of last year And this was made mainly driven by lower charges for amortization of technology and databases, and that was partially offset by slightly higher SG and A expenses. And the increase in SG and A partly reflects the amortization of acquired customer contracts following our recent acquisitions in telematics. Marketing expenses were relatively flat year on year. The other financial result for the quarter was a charge 1,000,000, which mainly reflects the impact of losses resulting from the revaluation of foreign currency monetary balance sheet items, which were not fully offset by the positive hedging results. The result for the quarter was a loss of €6,900,000. The adjusted net result on a post tax basis was 1,000,000, and this translates into adjusted earnings per share of for the first quarter. At the end of the quarter, we reported net cash position of 1,000,000. Cash flow from operating activities for the quarter was 1,000,000, which was slightly below last year's, and the cash flow used in investing activities was stable at 1,000,000 compared to last 15 as a whole, so we're reiterating our guidance for the full year. We expect revenue to grow to around 1,000,000,000, This revenue growth will be weighted towards the second half of the year, and we are expecting to see growth in 3 out of the 4 of our business units this year. Not in automotive, whereas we've already flagged, we expect a modest decline, but the others will grow. We're maintaining the level of investment, both in terms of CapEx and OpEx in our core technologies at similar level, levels to last year. And despite the currency situation, we expect adjusted earnings per share to be maintained at around So that concludes the formal part of the earnings call. Operator, we'd now like to start with the Q and you. We will now take our first question from Stuart Jeffrey from Nomura. Please go ahead. Hi there. Thanks very much. Question on mapping industry now that Nokia has announced they're looking to sell here. Is there any scope for you to be a bit disruptive in the intervening period and perhaps gain share or other sales cycles just too long to have any significant impact? And then perhaps more broadly, could you just talk about how you see the industry in terms of the benefits of vertical integration versus being somewhat independent, whether you have any particular concerns about one of the major players getting involved to vertically integrate the HEAR business? Thank you. Sure. Thank you. You know, it's difficult to anticipate what happened at the beginning of this process. I don't want to speculate what it will mean this stage for the industry or whether that present additional opportunities for us. But needless to say that we follow the developments very closely and of what's going on in the industry. I think in terms of being disruptive, I think what's supposed to generate to to, you know, what we hear from our customers is that they like what we're doing in terms of technology. I think the, ability to make maps in real time to connect all sorts of sensors, crowdsourced information to our platform and our ability to process that in a highly automated way, is seen as fundamental to future use cases. Would also like to point out that, we do have a very cost effective way of making maps and publishing those maps. And I think the combination of having that real time platform ability to process, send the data and other data from external parties and from our customers indeed, in combination with a local platform, gives us a good position going forward. We feel good about it. And I think the, the recent successes we've had in automotive and the wins we had in 2015, or 2014, our proof of that, and we don't see that slowing down in 2015. So as far as I'm concerned, we are planning for growth in automotive, substantial growth in automotive in 2016. We have our technology sorted out. We are running a tight ship we can make maps and content at a much lower cost than anyone else. And I think those are very sound foundations to further win market share and deliver the products that Mark is asking for. Can I just add as a sort of add on when you say you can make maps at a much lower cost than anyone else? How do you benchmark that and what is the enabler of that? Well, we don't have the exact numbers, but look at the that we know how much we spend, of internally, we have a good estimate of what others are spending And then if you look at the end result, then I think it's safe to say for us that we are a lot more efficient. We get a lot more bang for buck than some of the other mapmakers in the industry. Great. Thank you. We will now take our next question from Andrew Humphrey from Morgan Stanley. Please go ahead. Hi, thank you for taking my question. I just wanted to drill down a bit more on the mix in the consumer business. Clearly, you're seeing some strength in ASPs there, which is leading to overall growth in spite of a flattish market share. How should we think about that over the remainder of the year? Are you seeing those trends lasting for a period of time? Could we see even more upside in terms of mix on pricing. And also maybe on the on the sports side there, Is the growth you've seen there in Q1 consistent with your aims of significantly increasing revenue that you've seen? Yeah. So let me let me handle, Dan. So ASPs are all in upward trend. I think that's partly an effect of the strengthening dollar, which means there's less opportunity to, for cost reduction, price reduction, you know, all of our competitors and similar products are all calculated and priced in dollars. So we would expect that over time, prices for consumer electronics goods that are manufactured in dollar denominated components will trend to we'll trend upwards as a result of the weakening euro. And indeed, we hope that that will take place in, throughout the year. And that by the end of 2015, we don't see big currency movements again, we would be trending towards normal gross margin levels. That we have been enjoying in the past. If I look at Sports, yeah, it's going well. We are, I think we are on track to deliver, a substantial growth. We want to double our revenue in the sports sector in 2015. We are on track to deliver that in Q1. We will now take our next question from Mark Hezzling from ABN Amoral. Please go ahead. Yes, thank you. Also on Automotive. Firstly, on the comments you just made, that you expect substantial growth as of 2016. To me, that sounds a bit more enthusiastic than before. I think earlier, you talked about growth as of 2016. Did that really change? Or is that the just wording for now? And then secondly, on some more fundamentals behind it, what are you seeing take rates in automotive. I heard some possible comments from the tier ones that take rates are increasing more than on average. What's your view there? And then on the pricing that you see in Automotive, is it stable? Going up, going down. What do you see there? Yes. So, yeah, so revenue in the automotive sector is for 2016 will be substantially higher than what we do in 2015. It has to be 2015 is lower than 2014. 2014 was also not a great year, but we started to recover ground in 2014 by booking 220,000,000 in orders. If you project that, again, the scheduled deliveries for 2016, then we can be quite confident that revenue will go up substantially 2016 in the Automotive segment. On your other question, take rates are indeed only up. So, still surprisingly low. It's below 30%. But it's an upward trend that creates a larger market that's partially offset by price pressure on, on maps itself. But if I look at our mixes, what we sell to the automotive industry that mix is now improving. It's not just maps, but it's also services, including, traffic information, navigation software, server based applications and services for which we see increased levels of demand, and that will also give us protection for a price decrease and compensates for a price decrease in, as a whole. So if I look at the amount of money we make per car, then, that looks good. As I said, order intake in 2014 will translate in sales in 2016. 2015 will be lower, but we expect as of Q4 this year, the trend to reverse and sales volumes to go up. One follow-up on to Clifford, is that does that mean that the feedback that you're receiving so far now that you started with replacing the new with the new Net platform, made that you more confident, that you have a strong position? Or is that the same as, let's say, a quarter ago? No, I think that has the outlook has not changed, but we continue to deliver against our plans Q1 bookings were, were in line with expectations, supportive of further growth. So, you know, I think I think we're doing okay. We're doing well. And that will result in growth. And it's going well in that part of our business. It has to go well as well. That's on our estimate that our market share is not where it should be. But we're claiming some of that. There are ample opportunities for there are a lot of opportunities growth in the Automotive segment. So we're investing heavily and I'm pleased to see that it, that returns now start to start to come in. That's clear. Thanks. We will now take our next question from Garrett Jenkins from UBS. Please go ahead. Thanks. Just a follow-up on that last question. I wondered if you could talk, you've talked healthily about the order bookings in automotive in the past. Just wondered if give us a sense of how the the order pipeline is is shaping there. Secondly, just on sports revenues, you mentioned the doubling this year. Could you talk about the margin profile there on? And whether there's any other verticals that you're interested in addressing, I noticed obviously, one of your competitors addresses things like aviation and and, and marine. I just wonder if that's something that you'd be interested in over time? Thanks. Think the margin profile on, so the first question was the margin profile on the sports watches, I think, order pipeline? Yeah. The auto pipeline. Yeah. So So when we, when we book an order, a contract, when we win a contract in automotive, typical profile of such a contract win is that you start shipping, about on average, 2 years after you have won the deal. And the total lifetime of those deals is approximately 4 years give or take. That is the bridge. So if you, as in last year, we booked 1,000,000 in orders, if there were all of that profile, then you start seeing 1four of 220,000,000 coming through the P and L in 2016 for periods of 4 years. So that's the that's the way to look at it. It's not all the same. There's a bit of variation. Some contracts take longer, have a longer lifetime. Others, a slight shortly asset, but that is more or less the profile. What you can say is that if you continue to book 1,000,000 in orders for a number of years, your revenue will trend to the 1,000,000 on an annual basis. Over time. So that's how to look at it. Now Order intake in 2004 was $220,000,000. Our expectation for this year is to exceed that number. It's not always that easy to plan and to say. So it can be quite jittery big deals in 1 quarter or they can be postponed or it's not a, it's all the continuous order intake, but it can be dependent on, on quite substantial programs. But what we see in the market is high levels of quoting activities, good percentage of wins, and, you know, and I think all in all, we're on the right track. And we're gaining momentum in that part of the business. So, yeah, there's a little bit more I can say at this stage, but, but I think you get a picture. Then, sports, so margins on sports products are slightly higher than the R and D. Sector. That's okay. Growth is happening there. As we had anticipated last year, we shipped 500,000 sports watches RA Mr doubled that this year. Last question, other verticals, you know, we, we, don't give guidance for, for product introduction we keep that for commercial reasons under the, we don't disclose that. But the, you know, if you look at aviation, I can safely say that it's not an area we're interested in And I think the, for the for for boating, it's also very specific market. There's no media plans to to enter those verticals if you like. Thank you. Other than that, I can't say much. We will now take our next question from Martin Den Driver from S And S Securities. Please go ahead. Can you provide us a little bit more granularity about the performance of the acquired telematics companies in terms of client attrition and growth? That would be the first question. The second question, relates to Go Mobile. I know it's a very, very early days a global launch. It's been not even been a month. But can you update us a little bit about your experience so far with this pricing model, the 75 Kilometers and the, the freemium or the upgrades. And then the final one, came up with a little bit more about how the partnerships with Borgesoftech and VW Research are progressing in terms of cooperation between the 2 companies, initial product development any information there would be useful. Thank you. Let me take the first question about the performance of the acquired businesses of telematics 6. So we've made 3. And each time we took on subscriber databases of around, I think, 27,000 each time. And the way we run the, these acquisitions is that the management teams of the acquired companies are put on to earn outs, which are all geared around converting the installed basis that we, the subscriber basis that we acquire onto our web fleet platform. Over a period that takes about 18 months. So, the first acquisition we made, Cortina, has gone right through the earnout period now. And that finished at the end of December. And in terms of the attrition level, so the level of the subscriber installed subscriber base that was lost in terms of where the, you know, how the earnout was, was put together. I think it was, you know, a very low percentage of subscribers were lost from that. So I think we are having gone through that, we can pleased with where we got to in the end. I mean, a few percent, sub 5%, I don't know the exact number. Then the second acquisition dams, we're in the we're still going through the earn out phase at the moment. And so, you know, progress is progress is okay at the moment, but we won't know until we get right through to the end. And FleetLogic hasn't hasn't started yet. I think so far so good, you know, we learn more each time we do an acquisition and try to do it better next time, but I think we can conclude that so far, pretty successful. And just to follow-up on that, the growth profile of these 3 that been similar? And has that, and if so, similar to TomTom's? And if so, has that continued at the same rate after the acquisition? Well, what happens is we, if you like, we we we merge it all together. So, you know, after a period of time, it's just part of the sales process for the individual countries. And, you know, are we selling at the same level that we should be, whether it's organic or acquired, And, I haven't seen anything that says that's gone off track. No, it's fine. Okay. And your second question, I think, was around the downloads. Yeah. The Go Mobile and, Go Mobile. The global launch. Sir, to Harold on this one. Yeah. So, yeah, we we adopted that, our pricing for the for the end road market. So we made a premium application available That is still early days, but the initial experience is positive. So we had about 750,000 downloads for that application. But it's too early to tell you what the conversion there is. What we can say now is that it's in any case not worse, than the fully paid upfront, application that we saw previously. So we expect, say, an upturn in revenue for those applications, but also a large number of downloads and in a big installed base. What was the conversion rates of similar types of applications previously? Well, we we you had to pay for the previously you had to pay for the, for the application. So there was no conversion. At all. You just paid, you got it and then you could use it indefinitely. Now you get it free as a download. And then after 75 kilometers of usage, you need to pay, you need to pay a usage fee. Yeah. So that's the way it works. And the final question was about the the update on the partnerships with Bush, Softtech and VW Research? Yes. So all that is, is going quarter plan. So a closed corporation in the VW case, it's research and development, oriented, very much focusing on highly automated driving and the technology you need for that. So there's a number of trials, a number of tests that are being performed. We're learning from that, VW is learning from that. And, you know, we're close to taking, 3, what we call, 3 d maps. So the, the maps that you need for highly automated driving very close to, to making first production samples of that product as a result of that partnership. So that's going in line with expectation, in, with Robert Bosch, we're also working closely together with NDS Maps linking sensor data from the car to our map making platform and move to automated map making a number of trials and developments are underway there, which are also very encouraging. So I would describe those partnerships as healthy inspiring and also for us essential to have a good understanding of future needs for our products and our technologies. Okay. Thank you. We will now take our next question from Alexander Peters from Exane. Please go ahead. Yes, hi there. Thanks for taking my question. I would like you to dwell a little bit on the licensing bit of the business, which actually showed a good growth this quarter. If you could tell us what was is that tracking ahead of your plans? I understand that traffic is a big part of that. Could you maybe tell us how much of the of licensing is down to traffic licenses to non auto clients And then the second question would be on Automotive. How well would that business scale as you move into very high growth? In other words, are you going to have to ramp OpEx to an extent in automotive when you switch into higher gears in growth there? Thanks. Okay. If I, I mean, if I talk first of all about, licensing and how, you know, it's performed in the first quarter of the year. Yeah, it's it's tracking a little bit ahead of our expectations. We're we're pleased with that performance. And you know, if you look at it, we had a growth of 3,000,000 year on year a half a 1,000,000 of that came from FX leaving 2,500,000 that comes in the main part from traffic, and that's a number of, deals that come in. It isn't, you know, one specifically. It is deals across both, you know, sales into, governments and regional bodies and that type of thing, but also from, agreements with with companies like Clear Channel as well, which is one of our customers in that space. So there are a number of different ones. I mean, licensing income is still much more Today is still much more about maps than it is about traffic, but traffic is growing faster than maps. Okay. I think you're pressing about Automotive and our ability to scale that business. Yes, I think it's important to understand that we are building platform products. So, components that are used software components, technology components that are used by 3rd party developers, which can be Tier 1s or OEs themselves or independent software developers who can use those components to quickly build or see navigation solutions for cars. So, in that respect, the business scales infinitely. Now At the same time, we have more customers, you have more customer demands for specifics for, for specials and what have you. So it's not linear. It's not completely scalable. But, this business can grow very substantially without is having to add a lot of overhead. That is the whole principle how we build this business and how we structured it and that and that seems to work. And just a quick follow-up if I may on Automotive revenue growth. You now seem to be saying it's going to be from Q4 onwards. So that's where the inflection point is happening? Is has anything new happened there or do you have just better visibility as we progress over time? Thanks. I think what we're trying to say is that by Q4 of this year, the decline that we see year on year going on at the moment in automotive will stop. So I think that's parting the way for growth to come through in 2016. So that's the way to look at it. Stop the decline and start to grow. Thank you very much. We will now take our next question from Hans Slab from Rubber Bank. Please go ahead. Yes, good afternoon. Thanks for taking my questions. Question on the outlook for terms on consumer. Consumer saw a 6% underlying sales decline in Q1. You expect growth for 2015 for the full year. Will this only be driven by growth for your SportWatch business, or do you also expect a further improvement for PND as well, throughout the year? And my second question is also related to TomTom traffic. Can you, indicate the growth and the bookings for Tom, Tom traffic and how large that revenue stream is as a percentage of your total sales now? Thanks. Let me talk about the consumer side. So overall for the year, you know, what's what we aim with the, P and D side of the business. I mean, we, you know, we've got an underlying market that is declining. Albeit at a lower rate, pricing is good. But I would, you know, my best guess at this point in time would be that or best estimate at this point in time would be that you know, we'll see a slight decline overall for the year. Sports should grow strong. Sport will grow strongly. And so overall, that should put consumer into a growth overall for the year. Okay. Okay. That's roughly that's how it should shape. And on Tom, Tom traffic? Yeah. And your question was how much overall of our revenue comes from traffic today? Yes. And how fast is to grow for Tantal traffic in its sales or in bookings? Yes. I mean, the thing about how we report our business at the moment is it's geared around the full business unit. So I can't give you an answer to that straight off the off the bat because some of it's in each of the businesses, and I need to come back to you on that one, I'm afraid, at the moment. But clearly, in terms of growth, we're seeing growth in a number of different areas. So it's, it's good. It's at a it's at a strong level. But I think we need to come back to you overall on, how much revenue is coming from traffic as a whole at the moment. Yes, that would be much appreciated. And maybe final one, when do you expect the impact from phasing out of the order automotive contracts to disappear? Is this also Q4? Yes. And it's back to kind of the pre question actually. I, you know, in Q4, what we expect is that automotive revenue will stop declining. And that and then we kick into growth in 2016. So that's how that will come out. Okay. Thanks very much. Okay. We will now take our next question from shyam Kumar from TT International. Please go ahead. Hi, thanks a lot. Can I just follow-up on the first question regarding Nokia here and the strategic elements in the industry? How should I think about, I guess, your asset base, your map, your navigation, your traffic, versus here in terms of the size, the scale, the quality. They've obviously got a bigger business in terms of their licensing and their auto revenue, but I'm just trying to sort of ascertain if it is a strategic buyer on the big tech giants who actually takes hold of here. I'm just trying to think how we think about valuation reader classes and similarities in your assets. Yeah. That's, that's a broad question. Not so sure how I can best address that. I think We're both in a mapping business. I think I cannot talk for here strategy and how they do things. I think where we, where we, where we differ mostly, so the similarities obviously our products, we are selling and licensing to the industry. I think what we have been focusing on a Stoltom, is to create a really cost effective business highly automated provide tools to our customers, to use that data and, of course, the active way. So runtime maps and navigation software, easy to integrate traffic, But if we stop short of taking on ourselves, big integration jobs or you. So we really take a platform approach, providing the core components that that our customers need and focusing on doing that as best as we can, and as cost effective as we can. And I think we are now seeing some real traction of that strategy coming through with higher levels of income that we can generate on assets. And that will give us 4 further opportunities to grow and and do what we are already doing. And there's, for us, I think, because we're the smaller player, quite a bit to gain there as well in terms of market share. And obviously, that's one of our core objectives to actually do that and deliver that growth. Okay. But I guess in terms of the underlying asset, the database, the scale, the number of countries covered, you guys are quite similar? There's a high level of similarity. I wouldn't say it's exactly the same. It's a high level of similarity. I think the, the, the thing that we are really trying to get across is that mapmaking in your day, in your way, is not going to work too expensive. We need to find more effective ways of doing that and more effective platforms to deliver those math. And maintain those maps and do that to a high degree of automation. That's where we've been focusing on. Okay. And that gives us, in our view, an edge, over anyone else in the industry. Perfect. Thank you. Question from Mark Wattenberg from ING. Please go ahead. Caller, please go ahead. Your line is open. Yeah, good afternoon. It's Mark Watenberg, ING. Thank you for taking my question. My first question is on the outlook statement to maintain the level of investments on the OpEx side. Q1 was more or less in line with last year. Should we take that outlook statement as being the coming quarters, the OpEx roughly in line with last year? That's my first question. My second question is on the gross margin. I think Harold, I heard you mention that you expect the gross margin. Give and take to 4x remaining at current levels that the gross margin will get back to normal levels again later this year. But, can you perhaps give me a bit of color how that should migrate back? What's the 4x impact? It's 4x impact. So how do you see that trending back? And then a final one, Thank you, Harold. I'll also let you, talk about revenue for automotive in the longer term to trend toward $220,000,000 revenues. Is it did I hit it correctly or, or am I mistaken here? Yeah, let me let me take the question about, OpEx then. What we've said overall, overall for the year, our OpEx will be flat to up a little bit, on last year. What we have to deal with is that we have got, you know, portions of our employees who are, outside the Eurozone, and that's put some upwards pressure with ForEx on the run rate for OpEx, but we're managing that as carefully as we can. But I think overall, as I say, will be flat, but maybe up a bit on last year. So that's pretty consistent with what we've said since we gave our guidance. In terms of the quarterly variation on that, you may see variations year on year in the quarters. We've been very flat in Q1, but to some extent, it will be dependent on the timing, for example, of marketing campaigns and when they actually happen, because those, investments are lumpy And if they fall in a different quarter 1 year to another, that can cause quarterly variations. And is there already some flexibility on the timing of that? You know, we have some plans internally. They're still fluid. They're not casting stone yet. So, you know, I'd rather not be prescriptive about that at this stage. It wouldn't be right. There are no further questions. Your second question, I think, was around gross margins and what's happening on gross margins and So, you know, the the point we're making is that over time, businesses need to adapt to the new reality with the change rates and adjust their businesses, which will happen as new products come in through actions in the supply chain And over time, the industry will adjust and gross margins will move back in the direction that they started off in. Again, exact timing on that. We work at it as fast as we can, clearly, because it's having an impact on our results, but, I can't commit that we'll be back at the same level by the end of this year. We will report some progress on that as things become clearer. And the last one was automotive. Yeah. That was, I think, you need to be careful. This is by way of example, and a pure mathematical explanation. If you book a certain level of order intake, per year and you do that for a long time, then your actual revenue will trend to that same number. Yes, but it's not indicative for our order intake, what we expect in 2015 or 2016 and beyond. That is too early to comment on that. Other than what we've said so far is that order intake and automotive of $220,000,000 in 2014, and we expect similar or higher level of order intake in 2015. As there are no further questions in the queue, that will conclude today's questions and answer session. I would now like to turn you back to the host any additional or closing remarks. Thank you, operator. I would like to thank you all for joining us this afternoon. If you have any questions at a later time, please don't hesitate to give us a call. Thank you all very much and 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.