Earnings Call: Q4 2019

Feb 10, 2020

Good morning, ladies and gentlemen. Thank you all for joining TeamViewer's earnings call for the full year 2019 preliminary results. With me are our CEO, Oliver Steil and our CFO, Stefan Geiser. They will guide you through our results. Following the presentation, we are happy to take your questions. Before we start, let me remind you of the cautionary note regarding forward looking statements that you can find on Page 2 of the presentation. Let me now hand over to Oliver. Thank you, Carsten. Good morning to all of you. Before Stefan is going to present the figures in detail, let me provide you with an overview of the business. As you can imagine, 2019 was a very important year for our company. We did the IPO in September. And then just 3 months after the listing, we became part of the MDAC, TechDAC indices, which established us pretty firmly in the capital markets. So that was very important from a capital markets perspective. But at the same time, it was a very important year also to execute on our growth strategy. As you remember, our initiatives fall into 3 buckets. 1 is expanding use cases, growing into all customer segments, especially enterprise segment, and then increasing our global reach through more local operations in strategic markets. And so all of that from our perspective worked out very well. We continue to see strong growth. We keep our profitability. And we also see that through all the initiatives that we're pursuing, there is quite some upside that we're seeing to come through. Our market it's huge. Addressable market is huge. So we continue to see lots of underpenetrated areas. Our customers are investing more and more into digitalization, and that is a clear tailwind for our business. So we like our market environment. And within this market environment, we're expanding our connectivity platform. So we're adding functionalities and use cases, and that's actually providing even more of the solutions that customer needs. And I think our successes in 2019, they underpin our strategy, our growth initiatives and show that we are pursuing the right initiatives there. So if I go to Page 4, just highlighting a few key points of our business in 2019. So first of all, of course, the growth continued the growth momentum in the 4th quarter continued. That resulted in overall billings growth of 41% year over year to 325,000,000 That was slightly exceeding our guidance. What is very important for us is that our new product initiatives are starting to bear fruit. So we had a billings contribution in 2019 of €16,000,000 which is, in absolute terms, of course, still small relative to the €325,000,000 But as part of the new billings, this is important. And of course, it's showing very significant growth, which is very good from our perspective. At the same time, apart from new products, subscriber growth was very strong, 71% year over year, got to a level of 464,000 subscribers at year end. The net retention rate remained on our operational target level, and we see continuing low growth churn, but Stefan is going to go through more details. So healthy growth, as expected. At the same time, we delivered on our envisioned profitability, clear economies of scale. And you remember our very efficient go to market model where we use the free users to convert and to monetize and addressing all the other segments. So with that, we achieved an adjusted EBITDA growth of 51% year over year, landing at €182,000,000 upper end of the guidance as well. The margin came up to 56 percent. That's 3.5 percentage points above 2018 level. Remember, we told you that in 2018 was an investment year into, for example, enterprise sales force, and we were saying that some of that will revert, and it actually did. And we kept our very high cash conversion at 94%, which provides high financial flexibility to delever the business and also pursue our internal or external growth opportunities. Talking about top line, 3 buckets of initiatives. As I mentioned before, first of all, the strengthening our customer segment coverage, that's actually two elements. 1 is moving up the segments into enterprise. The other is moving to the Soho segment. So for enterprise, we have been we continue to invest more and more solutions and use cases driven for enterprises. And this leads to 2 effects. 1 is that we see more deals above €10,000 so what we call larger deals across the organizations. And on the other hand, we also see at the top end of the deals larger contribution. I'm going to talk about that. So that's very successful. Of course, in order to be able to do so, we move more into operations technology. We move more into IoT use cases, which is needed by the enterprise. At the same time, we also developed our remote access product, which is fundamentally geared for SOHOs, so individual people connecting to their office space. And we have progressed the rollout there, in line with our new ERP rollout. So very pleased with the segment coverage successes. Secondly, geographic expansion. I'd highlight 2 things. 1 is a year a region where we invested a lot in previous years is the Americas. We ramped up the office staff and also the sales force there, and that has been bearing fruit in 2019. Substantial step up, €110,000,000 billings, 59% up year over year. So very successful. We continue to invest into this market, APAC. You remember that we opened offices in China, India and Japan. Clearly, 2019 was a foundational year for that, but we're also seeing progress in these regions. Last but not least, constant use case innovation. We continue and will continue to invest into R and D to make our product usable in more areas. Important to call out for 2019, I would say, is the progress in IoT solutions for very innovative applications and also our augmented reality product called TeamViewer Pilot, which gained some traction already in the 1st 12 months, which is something which the company never really had before that there is significant traction already in early years. And that shows our ability to cross sell now that we are done with the subscription migration. We also prepare for faster growth in R and D. We just opened an office in Greece, a new R and D hub to be able to tap into the talent pool in more areas, in addition to, of course, our locations in Germany and Armenia. I'd like to turn Page 5 to our growth. Important to note that the 2019 billings of €325,000,000 were substantially driven by our subscriber growth as well, which now got to 464,000 at year end. We do see low churn. And based on the new products, which I mentioned before, we have more opportunity to cross and upsell into our existing customers. And that creates stability in our billings, while our growth initiatives and effective conversion model have attracted and added 174,000 new subscribers, which translates into 98,000,000 billings for the last year, very important. What is also important for us, if we go to Page 6, is specifically the Enterprise segment. I think you all are very well aware of our kind of high velocity subscriber growth model, the funnels from free users to monetization. What is newer to all of us is the enterprise segment. I think you remember that we only had a full tensor version available at the beginning of last year. So effectively, we see the development over the last 12 months here. And 2 statistics we'd like to call out. Number 1, which we also mentioned before, is the deals with an annual contract value above 10,000. If we look at this number on an LTM basis and we compare December 2018 year end with December 2019 year end, we see a 67% growth, so 698 deals. Why is that important? It shows that our largest sales channel, which is inside sales, it shows that these people, the sales reps, are getting more and more used to selling larger ticket items. You remember that a lot of the activities of those people in the past was around €3,000 €5,000 Now more of them are comfortably selling tickets of 15 ks, and that is reflected in this statistics. So we like the development there because it shows that the enterprise traction is pretty broad across our organization. A second KPI, which we're showing here, which is the top end of our deal pipeline, because we got many questions around the top end deals, how big they are and the topics and so forth. So we put together a KPI, which is the top 50 deals accumulated in annual contract value. Same timing here comparing end of December to 2018 to end of December 2019. You see also 60% growth 4th quarter, so €3,400,000 Looking backwards, 12 months is the contribution of the top 50 deals. And we're also very pleased to see that this development continues to actually accelerate in 2020. So we intend to give you regular updates on these statistics to show you the traction of the enterprise activities. And then lastly, Page 7, just to summarize that sort of our performance. Q4 billings 2018 to 2019 plus 34%, 100.6 €1,000,000 in billings. That was a strong contribution to the overall billings number, 41%, slightly above guidance for the billings number. And then adjusted cash EBITDA, one note. This adjusted cash EBITDA is defined exactly as is the cash EBITDA we were talking about in the past. So consistent set of KPIs here. Q4 step up of 46%, up to €62,600,000 with a Q4 adjusted EBITDA margin of 62.2%. And for the full year, that's a 51% step up, and the margin landed at 56%, nicely above previous year. And with this those snapshots, I'd like to hand over to Stefan, who is going to do the detailed discussion of financials. Great. Thank you very much, Oliver. Good morning from my side as well. I'm pleased to provide you with the details on our strong financials, which Oliver just read for the past year, which are pretty much in line with the preannouncements from early January. Billings increased by 41% to close to €325,000,000 now. Q4 billings amount to just slightly above €100,000,000 which corresponds to a 34% increase compared to Q4 prior year. We clearly saw a very strong growth across all regions with the Americas continuing to grow at the fastest pace in 2019, showing a very healthy 59% growth for the full year and 55% growth in the 4th quarter. So as Oliver mentioned, we clearly see the benefits of the investments into local sales and marketing. And if you combine it with the strong execution from the local team, this led to this overall very strong billings growth in the Americas. Also very good performance in EMEA. We experienced continued growth across all major territories in 20 19, including our larger home markets like Germany, Austria, Switzerland, but also U. K. And Southern Europe. We significantly added additional salespeople across EMEA, especially in the enterprise segment. And now we basically have sales employees on the ground in all major markets across EMEA. That clearly wasn't the case 2 years ago. And then coming to APAC. APAC's billings growth is mainly driven by the increased penetration of our local markets with the opening of the offices, which we mentioned a few times in China, Japan and India. Maybe worthwhile to point out that during Q4, we had a particularly strong quarter in Japan, accelerating growth there and that company nearly doubled its billings quarter over quarter. So very good start there. Overall contribution from APAC still relatively small. But if you take the current growth rates, we clearly see that we are getting increased selection in those markets. And the rest of the APAC countries continue to grow nicely as well. Now if we move on to the next slide, the slide showing the billing split between perpetual and subscribers retained subscribers and new subscribers. You can clearly see that the seasonality of our billings is starting to fade now. 2019 was clearly marked by lots of volatility in our quarterly billings growth. Now that we have concluded our transition from the perpetual license to subscription model, that will be more evenly spread going forward. Billings in the Q4 of 2019 are now largely driven by retained customers, who contributed €72,900,000 in the 4th quarter. Given the large renewal base in Q4, I'm particularly pleased or we were particularly focused on strong customer retention, and it's been a great success that our gross churn remained stable at high single digit in the 4th quarter. So in addition to our strong contribution from the renewal base, almost a quarter of the billings was contributed by new subscribers on new business. So overall, a very strong performance in the Q4. We turn to the next slide. Cash EBITDA or adjusted EBITDA, as we now call it, if you take a look at our probability, the strong growth in billings, coupled with very strong scale effect across all functions and combined with our efficient go to market model, led to this very strong growth in adjusted EBITDA, as you can see on that Slide 11. For the full year, adjusted EBITDA is now recorded CHF 182,100,000 at the upper end of the guidance compared to CHF120 1,000,000 in 2018. GP margins increased nicely to 92.5%. As Oliver already mentioned, we invested substantially across all functions, predominantly in 2019 into sales and marketing, but also research and development now with the latest office opening increase. Our sales and marketing increase grew by nearly 50% in 2019, driven clearly by the enterprise expansion, but also inside sales and general sales across EMEA and APAC. We also significantly increased, especially during the end of the year, our engineering resources. But however, due to the efficient customer acquisition model, total costs grew overall slower than billings and hence, resulting in adjusted EBITDA margin improvement now at 56% compared to 52% in 2018. Also within G and A, we continue to invest into our infrastructure, into our new ERP system, and we also ramp up investments needed now as a public listed company. We'll turn to cash conversion on the next slide. Very strong quarter, I would say, in terms of cash collection. Clearly a very asset light business model and very low working capital requirement. And as a result of that, most of our adjusted EBITDA converts nicely into cash flow. We had a particularly strong quarter in terms of cash generation, driven by the adjusted EBITDA growth as well as good working capital management. Our pretax free cash flow amounts to SEK61,900,000 for the 4th quarter and SEK171,500,000 overall for 2019. CapEx in the Q4, €8,500,000 and for the full year, slightly above our guidance at €16,600,000. This is primarily driven by our new headquarters, as we mentioned, and the implementation of the new e commerce and accounting system. Conversion rate remained particularly strong with 99% conversion rate in the 4th quarter and 94% for the full year. So overall, I believe a very good benchmark for the within the industry. I think the next slide wraps this up nicely. The updated financial model, if you take a look at our free cash flow conversion, for every dollar we generate in billings, we basically generated $0.53 in pretax free cash flow. So very strong pretax free cash flow generation in 2019. And as a result of that, our leverage also decreased nicely. We mentioned during the year that we should be at around the 3 year 2.0 mark, and we've achieved exactly that. Leverage decreased to 3.0x in 2019, exactly in line with our expectations. The interest bearing financial liabilities are now at €616,000,000 at the end of 2019, which basically consists of €559,000,000 of bank loan and €21,000,000 of capitalized operating lease obligations. And if you take a step back and take a look at our free cash flow generation and adjusted EBITDA growth, we expect that our leverage will be significantly below 2x at the end of December 2020. Now let's move to the year ahead of us. With 2019 in the bank, let's take a look at our outlook for 2020. Given the continued net retention rate, north of 100 percent and our expected new subscriber growth driven by the underlying market growth and dynamics, as Oliver mentioned, in our very tangible growth levers, we are targeting our billings to be in a range of €430,000,000 to €440,000,000 With the transition from perpetual licensing to a subscription based model pretty much completed, revenues will now no longer outpace billings as we have rolled off a material amount of the remaining perpetual deferred revenues from the balance sheet now. We have a remaining amount of roughly CHF 60,000,000 of perpetual deferred revenue on the balance sheet. So as a result of that, revenue is expected to be broadly in line with billings and in a range of EUR 420,000,000 to €430,000,000 Now in terms of adjusted EBITDA, clearly, we continue to invest with a similar capital allocation as in 2019. We invest into our growth initiatives, into sales and marketing, the new use cases, geographic expansion and new products. And therefore, adjusted EBITDA is expected to grow in line with our billings growth and should reach €240,000,000 to €250,000,000 in 2020. And then lastly, let me point out CapEx for 2020. We expect CapEx to be around €25,000,000 This increased level continues to be attributable to the construction of our new headquarter in Goping, where we're going to move in 2 quarters' time and the introduction of this new ERP system, which will be completed by summer 2020. Beyond 2020, I then expect CapEx to be significantly lower again around the levels of 2018, 2019. I think with that, I conclude our presentation. And now we're happy to take your questions. Thank you. We will now begin our question and answer session. And our first question comes from the line of Adam Wood from Morgan Stanley. Please go ahead. Your line is open. Hi, good morning and thanks for taking the question. I've got 2 please. Maybe just first of all on the enterprise side of the business, clearly that's performing very well. You're having a lot of success here. Could you maybe talk a little bit about what the pipeline looks like at the start of 2020? A little bit about the hiring plans you have on the direct side, geographies numbers? And then maybe just dig in a little bit onto the use cases that you see gaining the most traction where you see that enterprise business resonating the best with customers. So that's the enterprise section. And then maybe just secondly on the margin guidance. You're obviously investing at the same pace of billings growth and you have such strong billings growth, it implies a pretty significant rate of investment. Could you talk a little bit about your ability to invest at that pace given it's going to be ahead of what you were doing in 2019? Where is that investment going in? And if there was to be upside on billings, would you allow that to fall to margin? Or would you actually increase the pace of investments that you're making in the business? Thank you. Okay. Thank you. I'll start with the enterprise question. So yes, as you say, good traction. We're very happy with the pipeline for the Q1 and Q2 that we see. So that would be mean significant growth for the year. I think we're going to disclose more once Q1 is done. But as you see from the steps that we've provided, that already January is providing a nice uplift on this one. In terms of use cases, this is really very broad. There is if I kind of think through the pipeline discussion that we have on a weekly basis, there is still here and there just broad IT support across the organization, but there's also significant discussion around remote management of IT and OT equipment, connecting into some kind of devices, which are non office devices, and then depends on the sector then, whether it's kind of equipment, medical equipment or retail, IT equipment or other machinery. So it's very broad, I would say. But this kind of case of remote IT, OT management is where it centers around, I would say. Hiring pace, we have actually pulled forward hiring direct enterprise reps for EMEA last year. I think we're now at total EMEA? Yes. 25. 25 in EMEA. We've also hired the first few people for the Americas towards the end of last year and be ramping that up. We have enterprise people in China, a few. We have a couple of people in Australia. We have a small team in Japan. So this all very much centered around enterprise, these new offices across around enterprise and reseller. We're continuing with that pace. I think we said as we gave to the guidance that by the end of this year, easily 70 people globally and then continuing from that base. So overall, very pleased, very broad development. What we do see is, I should say, in EMEA, we are ahead in deal sizes. So the larger deal sizes, 6 digit deal sizes, more regular happening in Europe, and not yet in the Americas. Americas still focusing more on what we call mid market. Typical deal size is 30 ks to 60 ks, but that's also moving up. And it's kind of lagging the development in EMEA because in EMEA, we have we hired those people a few quarters earlier, and therefore, the pipeline is converting starting to convert now versus Americas where we will need a few quarters to get that going. And then maybe, Adam, let me take the question regarding margin expansion and strategic investment areas for 2020. Clearly, 2019 was very much focused on sales and marketing expansion, especially around the enterprise segment. That will be slightly more biased towards R and D in 2020. I think from a customer engagement level, we are significantly advanced now in terms of our engagement, especially around the enterprise customers. And therefore, we will accelerate our R and D investments. It's also one of the reasons why we opened up this office in Greece, where we are pretty excited about. So you can expect significantly higher headcount in R and D or higher headcount growth in R and D compared to 2019. Clearly, sales and marketing will continue to grow, as Olver just mentioned. And if we see that we see that we get additional traction around any of those additional use cases or geographic expansion plans, any additional upside on billings will certainly be reinvested into additional growth levers if we find them. That was also the case in 2019, as we pointed out a few times. Perfect. That's very clear. Thank you. Thank you. Our next question comes from the line of James Goodman at Barclays. Please go ahead. Your line is open. Yes, morning. Thank you. Firstly, just following up on the margin question. So if you could just comment a little bit on the phasing of margin through next year because this year we saw, if I remember correctly, much, much more margin expansion in the first half in the second half. And then just in terms of the 60% medium term guidance that you have for margin, does that still stand as is? And this is just a question of the shape of margin progression between 2018 and that. And then just secondly on the CapEx, I may have missed this slightly here, but just in terms of the additional €10,000,000 to €15,000,000 in CapEx versus what we were talking about previously, is that mainly the ERP system that's incremental there? Or is it a sort of expansion of spend around the HQ? And if you could just reiterate what you're saying around that coming down the year after? This is just a one off spend around an ERP system, is it? Thank you. Sure. Thanks for your question, James. So first of all, around the margin expansion. Clearly, 2019 was much more volatile in terms of margin expansion, but also remember that we are here comparing perpetual prior year quarters with subscription quarters. So that makes it a bit more difficult. The margin expansion will be pretty much or will be more stable or equally balanced throughout the year. Clearly, Q4 will continue to be the biggest quarter in terms of EBITDA contribution because that's where we have a significant amount of our customers renew their contract. So that will remain the biggest one for us in terms of overall margin. Then beyond the 2020, I don't see any need for change in the guidance. Clearly, if we see continued growth opportunities, we will accelerate our investments, but it's very much in line with our financial envelope, which we developed together with you during the IPO. And then maybe in terms of CapEx, the CHF 25,000,000, the biggest deviation comes from the new headquarter. So if you break this down, the €25,000,000 €8,000,000 of that relates to the headquarters and €7,000,000 to €8,000,000 relates to the ERP system. Both of those topics will largely disappear in 2020. And therefore, the normalized CapEx is in the €10,000,000 to €50,000,000 range. That's great. Thanks. And to sort of phrase the question a little bit more straightforwardly, you're effectively saying on the margin next year, effectively the year on year progression in adjusted EBITDA will be quite evenly balanced I just want to point out that Q4 remains the biggest quarter in terms of or the most important one in terms of overall EBITDA contribution. Yes, very clear. Thank you. Thank you. Our next question comes from the line of John King at Bank of America. Please go ahead. Your line is open. Yes, thanks. Good morning, everybody. A couple of questions, please. Firstly, on the sales productivity that you've seen, obviously, in the last 12 months, there's been a big step up, I guess, given the subscription transition and the fact that allows you to focus as a team much more on new sales rather than renewals. I just wonder as we kind of lap that transition, is there a risk that's a one time gain in productivity that you've annualized? And I guess, question is, what are the further sources of upside to sales productivity you can drive? Or do you think that ultimately that was a big step forward that to some extent unrepeatable? And then the second question was on the enterprise. Thanks for the details you provided on Slide 6. Can I just confirm, well, check one thing, the customer ACV above 10 €1,000 presumably not all of those deals are tensor since you had over 400 of these a year ago when tensor only just launched? So how much of the incremental comes from Tensor deals? Okay. So on sales productivity, I think there is 2 things to look into here. 1 is the migration of customers from perpetual to subscription licenses, which is now largely done. So in that sense, the productivity improvements, if you want to allocate any to this, that's done. What is only starting really is that the inside sales, and especially this is driven by inside sales, of course, what is only starting is the significant cross sell and upsell activity, especially cross sell of these inside sales people. So I think as we said, last year, 2019, the contribution of new product initiatives was 16,000,000 euros And while that is gaining traction, nicely gaining traction, it's still low in absolute terms. And if you look at the different products, the different separate licenses that we have, Tensor, Remote Management, Pilot, So each of them is a few million contribution, which is great, but it's by no means that this productivity gain is already factored into our go forward number. So there will be much more coming. The whole compensation system, goaling system will now be transferred into something which is very much geared to these new products and the Tensor product also for inside sales. So we feel very good about what is yet to come there, and we're adding products which allow for cross sell opportunities. So that's how I would see it. Enterprise, you're absolutely right. Some of the deals that are around 15, 20 ks are actually not tensor deals, but corporate licenses with add on channels, but also at a higher price point because the fact that Tensor is out there often yields discussions around additional functionalities for customers and then a discussion around Tensor. And often that then results in a Tensor sale, which is significantly higher in terms of ACV than the old deal. But sometimes customers also say, well, okay, I understand the Tensor functionality. I still don't fully need it. So can I get another in between year for a corporate license with unlimited endpoints? Because I'd like to continue to do that, but that also comes at a higher price point. So there's a positive halo effect from the Tensor product, which we have there. I think overall, Tensor contribution last year in terms of billings was around €7,000,000 So that gives you an idea that it's the largest contributor among the 16 from new product initiatives, but it has a broader increasing ACV effect as well. And our next question comes from the line of Stephane Klepp at Commerzbank. Please go ahead. Your line is open. Yes. Good morning, gentlemen. I only have one question. And I was wondering if you could give us some granularity about your billings growth. I mean, you were guiding for 32% to 35%. How do you think about that in terms of verticals, regions, client clusters? So in terms of the regional billings growth, I'd expect all regions to be much more similar in that growth pattern compared to 2019. Now we also compare really subscription year with the full subscription year and not with the perpetual year anymore. Clearly, I would expect APAC to grow the fastest in terms of in percentage growth, then probably followed by EMEA or Americas, they should be pretty much at the same pace, give or take. So that's a regional growth perspective. I would say within the use cases, clearly the enterprise segment and especially there, the IoT and OT applications should drive significant growth as we have seen also in 2019. That should be one of the key growth levers there as well. And then also the new products which we released, the virtual reality, the pilot product and remote access and remote management should be additional growth drivers in 2020, which are clearly outpacing the other growth levers we are having. How do you think about enterprise growth then in comparison to, let's say, the usual growth? I mean, last year, I think it was more than 20 percentage points higher growth in enterprise or let's say your deals above 10,000 per annum. So do you still believe that you can keep on that pace? And I was surprised that you say EMEA and U. S. Should be probably at the same percentage because in the U. S. There must be probably a lower base in those larger deals and you're just starting to employ those sales execs or you're basically starting hiring those sales executives there? Yes, that's the reason. So especially in the enterprise segment, we clearly see a continuous acceleration of growth. So that should be actually accelerating in 2020. Remember that most of the enterprise investments were done early 2019 mid 2019. So now we have a fully fledged sales operation, especially in EMEA. So if they've already built their pipeline and that will now result in accelerated billings growth in the enterprise segment in EMEA, as we have already seen in Q4, frankly. As we mentioned, Americas is slightly behind. We only had that mid market team basically. So they've ramped up their enterprise sales team during Q3 and Q4, but they now still build their pipeline and start converting in basically early 2020. So that's one of the reasons they see faster enterprise growth in EMEA compared to Americas, and that might result overall in faster growth in EMEA, but it remains to be seen. So they should be pretty similar growth regions for us. Our next question comes from the line of Mohammad Molla of Goldman Sachs. Please go ahead. Your line is open. Great. Thank you very much. First of all, on enterprise, can you perhaps talk about augmenting the inside sales and the direct sales with potentially partnerships with other vendors in the kind of IoT space to further accelerate growth? And then secondly, Stefan, I just missed what you said on gross renewals. I know the net renewal rate has kind of dipped a little bit towards the end of the year. But can you just confirm where the kind of gross renewal rate is tracking? Yes. So I'll take the first one on the partnerships. So a fair point. I think what we will see over time is that we will work more with partners for larger deals and more use cases across the whole business. So that can be systems integrators or systems integrators for some part of the enterprise pipeline, larger distributors, IoT partners. So there is more coming there. And I think it's clearly based on the fact that now since 1 year, we have the Tencent product and we have much more available in for more use cases. So that's starting. I think remember the discussion that we had that we worked with partners for quite some time. Sometimes these partners are focusing or have been focusing in the past on reselling of kind of lower level licenses, business and premium licenses, which licenses, which strategically is not what is valuable for us. So we're actively steering that away to corporate licenses. And then, of course, we engage on discussions around Tensor and IoT. So there will be more to come, but there hasn't been anything substantial in the figures of 2019, and I think it will take some time to ramp up. And then maybe just on gross churn, Mo. Gross churn remained stable at 8%, in particular strong cycle in the last renewal base in Q4. So we've been able to keep that at a high single digit of 8%. Great. Thank you very much. Thank you. Okay. There seems to be no further questions. So ladies and gentlemen, thank you for your attendance. This call has been concluded. You may disconnect.