Ladies and gentlemen, good day, and welcome to Angel One Limited Q2 FY 2024 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Hitul Gutka from Angel One Limited. Thank you, and over to you, sir.
Good morning, and welcome, everyone. Thank you for joining us today to discuss Angel One's Q2 FY 2024 financial and business performance. The recording of today's earnings call and transcript will be uploaded on our website under the Investor Relations section. The financial results, investor presentation, and the press release are also available on the website. For today's call, Angel One is represented by Dinesh Thakkar, Chairman and Managing Director, Vineet Agrawal, CFO. We also have the senior leadership team of Angel One, along with SGA, our IR consultants. The leadership team will give you a brief overview of the operational and financial performance of the quarter gone by, followed by a Q&A session. Please note, there may be certain forward-looking statements during the call, which must be viewed in aggregate with the risks that the company faces. With this brief introduction, I now invite Mr. Dinesh Thakkar for his opening remarks.
Thank you, Hitul. Good morning, everyone. I'm happy to share that Q 2 FY 2024 reflects the superior execution of Angel One's robust growth strategies as we continue to gain market share across various parameters. I will take you through some of the company's key development and leave you with a summary of our plans for next few quarters, after which Vineet will walk you through our financial performance. Seamless and superior client experience on our digital platform is the bedrock of company's growth. To maintain this growth in digital era, we must always prioritize our clients' needs and keep current with the rapid pace of technological and product development. During the quarter, we rolled out enhancement across the Super App, which led to further improvement in our overall NPS.
I'm happy to share that we continue to innovate and offer our clients some of the industry's leading features across all offerings on our platform. We have focused specially on simplifying the onboarding process for both new to market and experienced clients, thus giving them a superior experience of our tech capabilities right from the first point of contact with our Super App. The success of this approach is evident from our improved ranking amongst the top 10 club of free finance app on Play Store and our third place ranking on iPad. Since majority of our clients are digital natives hailing from Tier 2 cities and beyond, who are new to market, it is imperative we create journeys that are user-friendly, compelling, and easy to follow as we handhold them through their initial experience of our products.
For example, through Trade Buddy within the Super App, we present a platform from which these new investors can embark on their first trading journey. This feature, compiled by influencers within a diverse customer cohort, offers a repository of curated educational videos in regional languages, which leads to better acceptance and motivation to consume such content. Moreover, to encourage and help young people to invest systematically and build their lifetime wealth, we have deployed and released the stock SIP feature. Over the course of the year, we will roll out several more exciting features, such as market open interest analytics, global indices, and stock discovery. This will further simplify our clients' investing and trading journey. Our endeavor to develop a lifelong relationship with our clients through a comprehensive digital financial services playbook has reaped handsome dividends, evident in the steady uptick of unique SIP registered through our app.
With over INR 7 lakh 25,000 unique SIP registered in Q2 FY 2024, we continue to remain India's second largest player in terms of incremental registered SIPs. Furthermore, we are systematically broadening our financial services offering with plans to close the financial lifecycle loop of our clients by distributing consumer credit products on our digital platforms in the upcoming quarter. We are currently building the platform and integrating our lending partners. We are also developing data-driven intelligence across customers' credit profiles to help lenders' underwriting process. With such a large client pool, we have access to a large quantum of data. We are harnessing the power of data by building predictive models driven by deep learning of our clients' behavioral pattern to further elevate the client experience on our platform....
These models are integrated in our system using AI/ML techniques to craft hyper-personalized journey, ultimately enhancing client satisfaction and delight. We have developed significant pivotal strategies to augment our decision-making process based on this advanced insights and forecasts, which has enabled us to adapt quickly to changing market conditions. We are investing in AI-led personalization to enhance user discovery on our Super App. We are also working towards incorporating the recommendation of Data Protection Act to the extent notified, to ensure greater security and consent framework for our clients. As mentioned in our quarter one FY 2024 earnings call, we rolled out our brand campaign to enhance awareness of our full stack fintech platform to address all our clients' financial needs and aspirations. The reception of this platform has been a resounding success, as we have noted through our brand track exercise.
During the quarter, we onboarded Nishant Jain as our Chief Business Officer for Assisted Business. He was pivotal in scaling up the online ordering business of Zomato and growing the merchant network of BharatPe. Nishant has also held senior leadership position at Coca-Cola and PepsiCo. Nishant's experience in building large-scale franchising will help formulate alliance with essential stakeholders and enhance business, performance through a strategic growth of our assisted business. Here, we plan to diversify and become a multi-channel business as we build an ecosystem that offers a full suite of financial products on our platform. We will leverage the huge data set and our digital capabilities to empower our partners to serve a wider client base. We plan to further augment our NXT platform as we integrate more features based on data, thus enabling our partners to have a more integrated approach to growth.
Through this medium, we'll be able to connect and positively influence a large underserved segment of the country's population. I am also happy to introduce Ravish Sinha, who has taken over the reins as CPTO. Ravish has a remarkable track record spanning over two decades. He held senior leadership positions in cutting-edge technology companies such as Flipkart and Yahoo! Ravish will drive the delivery of Angel's product vision, strategy, design, engineering, and cross-functional influence. During the quarter, the board approved our business restructuring plan, which includes the proposed move of our broking business under our direct and assisted channel to our wholly owned subsidiaries, Angel Crest Limited and Angel Securities Limited, respectively. By doing this, Angel One Group will have a more focused and efficient organizational structure, and each business will have better flexibility and independence to foster growth and become a leader under their respective segments.
As Angel One will be a flagship company, it will continue to house the Super App, tech infrastructure and development, product development, data analytics, and other business support functions. Since all the companies are wholly owned subsidiaries, there will be no negative impact on financial performance of the company. In quarter two FY 2024, we moved ahead with filing of final approval of our AMC business. We are progressing rapidly in setting up the business infrastructure and building the team, and are continuously engaged with regulators on this regard. It gives me great pleasure to share with you that our organizational culture is being well recognized. We have now been listed amongst the top 100 best companies to work in, for in India, both for women and millennials, a recognition given to us by the Great Place to Work Institute.
This fortifies our commitment to develop a safe and secure workplace for everyone. I am delighted to share with you that our operational performance in quarter two FY 2024 has been historic. We acquired over 2 million customers in quarter two FY 2024, which is our lifetime best, thus growing our client base to over 17 million as of September 2023. This growth has advanced our share of India's incremental and total demat accounts to 22% and 13.2% respectively. Our orders, a key revenue driver of our business, grew by a robust 36% sequentially to over 338 million, again, marking our lifetime best.
The ADTO generated on our platform continued to be in an uptrend, growing by 30% quarter-over-quarter to nearly INR 30 trillion, as we continue to gain market share in overall retail equity turnover by 168 basis points quarter-over-quarter to 26.2%. In H1 FY 2024, we acquired over 3.4 million clients and reported nearly 587 million orders executed on our platform, which is 73% and 63% respectively, of FY 2022 performance. I hope these insights have given you a flavor of our tech-driven business model and our growth strategy to become a more integrated financial service player. Vineet will now take you through our financial performance, after which we'll be happy to answer your questions. Vineet, over to you.
Thank you, Dinesh, and good morning, everyone. As highlighted by Dinesh, Q2 of FY 2024 has been a very strong quarter for us, as we present our historic best performance across both operational and financial parameters. Our quarterly total gross revenues exceeded the INR 10 billion mark for the first time during Q2 of financial year 2024. This was driven by robust market conditions, coupled with amplified client activity, as seen from our historic best average daily turnovers, average daily orders, which grew by 29.7% sequentially to 5.4 million, taking our aggregate orders to 338 million in Q2, FY 2024.
Notwithstanding that there were three, that is 5% more trading days in quarter two of FY 2024 when compared to quarter one of FY 2024, our gross broking revenue grew by 30.4% quarter-over-quarter to nearly INR 7.3 billion, accounting for about 69% of our total gross revenues for quarter two of FY 2024. F&O continues to drive our gross broking revenue, contributing 85% in quarter two of FY 2024, while the share of cash and commodity segments remained stable at 11% and 4%, respectively. Are under the direct channel. Their share in our net broking revenues stood at approximately 78%, and the balance 22% was contributed by clients acquired through our assisted business. As clients continue to transact on our platform, their contribution to revenues remain robust.
Share of more than two-year-old clients steadily increased to 46% in quarter two from 25% in quarter two of FY 2022. The longevity of these young, new to the market, revenue-generating clients on the platform is further being fortified through our various initiatives, developments, and offerings across the entire spectrum of Angel One's Super App platform. It is noteworthy that we continue to witness healthy revenue progression as clients become more attuned to our platform. I would like to emphasize that our cohort level data remains exceptionally robust. The most recent data regarding broking revenue from clients entering their second, third, and fourth years shows strong performance at 85%, 80%, and 63%, respectively, of their first-year revenue.
When we apply this updated behavioral data to our client set acquired in FY 2022, their three-year estimated revenue to cost of acquisition ratio continues to remain very robust at 7.9 x. This reinforces the strong unit economics underlying our business. Interest income, which includes interest earned from our client funding book and from deposits with exchanges, grew by approximately 25% quarter-on-quarter to INR 1.8 billion. This accounted for 17% of total gross revenues in Q2 of FY 2024. The ancillary transaction income linked to the turnover clients do on our platform stood at approximately INR 0.9 billion, accounting for nearly 9% of Q2 FY 2024 total gross revenues.
Finance cost was higher by 44% quarter-over-quarter to INR 264 million in quarter two of FY 2024 on account of higher average borrowings for the period in line with higher client funding risk. quarter two of FY 2024, finance cost also includes the impact of higher borrowings for substituting the underlying collateral for bank guarantees with own funds towards margins with clearing corporation, pursuant to the SEBI circular, discontinuing any client funds as collaterals for bank guarantees. Employee benefit expenses, including ESOP cost at INR 1.3 billion in quarter two of FY 2024, was higher sequentially due to increase in our headcount and related hiring spends. Other OpEx for the quarter of over INR 2.6 billion grew in line with our operations, driven by spends on higher client acquisition, their one-time onboarding costs, towards tech infrastructure, demat charges, CSR, and other expenses.
Our consolidated operating margin for the quarter stood at 51.3% versus 48.6% in quarter one of FY 2024. 26% increase in depreciation and amortization costs to INR 112 million in quarter two of FY 2024 was on account of the commissioning of our disaster recovery site at Chennai. Our consolidated profit after tax from continuing operations grew 37.9% quarter-on-quarter from INR 2.2 billion in quarter one to over INR 3 billion in quarter two of FY 2024. For quarter two FY 2024, the board has approved a distribution of 35% of post-tax profits as second interim dividend to the shareholders, aggregating to INR 1.06 billion, translating to INR 12.7 per equity share.
Our H1 FY 2024 total gross revenues and profit after tax stood at INR 18.6 billion and INR 5.3 billion, respectively, representing a growth of 30.1% and 32.9% over the corresponding period last year. Cash and cash equivalent increased to INR 76 billion on the back of increase in client margins. Client funding book grew to nearly INR 19.5 billion, compared to INR 11.5 billion as of March 2023. Consolidated net worth of the company grew to INR 26.1 billion.
As we continue to operate the business within our desired margin profile, our H1 FY 2024 annualized return on average equity remains healthy at 44%. With this, I conclude the presentation and open the floor for further discussion. Thank you.
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Swarnabh Mukherjee from B&K Securities. Please go ahead.
Yeah, thank you for the opportunity, sir. Hope I'm audible?
Yes, sir.
Yeah. Yeah. So first of all, I would like to congratulate all of you for the strong performance that you have recorded. Now, coming to questions, you know, first question is on the assisted part of the business. So, in slide six, you have given some color on how what is the plan, but I request you to give it a little bit more granular and maybe quantitative manner so that we can understand what this part of the journey of the business is expected from this part. And given that you have mentioned, you know, involvement of leading DSAs and mutual fund distributors, so are we eventually going to mold this part of business into a national distributor kind of a model?
Will retail be our core focus areas, or are we going to kind of move up the scale and target HNI as well? So that is the first question. Secondly, sir, also wanted to understand a couple of things on the recent business performance. First of all, the strong increase in the number of orders that we are recording per day. So, what would be the reasons, if you could break it down, so apart from the fact that the overall market remains bull, and how is activation of new customers going on, whether that is reflecting in this or in, you know, BSE also ramping up in volumes and similar levers, if you could point out in little bit more detail on that.
And thirdly, related to the customer acquisition, wanted to understand, you know, the strong growth we are seeing, how would be the contribution of the equity channel related to that and the NBFC directive that has come up, where we are standing on that? So these are my three questions.
So, Mr. Mukherjee, what I understand your first question was on assisted channels, so I will ask, Nishant to answer that part.
Yeah, thanks for your question, Dr. Mukherjee. Let me kind of paint a picture, which may help you kind of decipher what one is intending to do. Today, if you look at our existing scenario, we are primarily centered around a single channel of acquisition, which is sub-brokers, and primarily in the equity F&O play. Now, if one was to zoom out, what you would see is that there are limitless possibilities and a lot of opportunity for partnerships which exist if one was to kind of look at tie-ups with FinTechs, various EdTech players, banks.
Even if you look at certain other channels, for example, the mutual fund distributors or the PoSPs or the DSAs, if one was able to kind of provide a good product market fit and kind of cater to the niche that they exist in, perhaps there are a lot of synergies that could be built out. So the idea of assisted business is therefore to have a multi-channel, multi-product play, and be able to eventually build a funnel through which we cross-sell our anchor products at a certain point in time, with the end objective being creating an Angel One equivalent size in the next three to five years within assisted business.
Okay, Mr. Mukherjee, I was unable to get your second part of the question. Can you, repeat that?
Yeah. So, second part on the assisted business was that, once we embark on the plan, and thank you, Nishant, for giving this color. So once we embark on this plan, will it kind of center around our existing customer? I mean, the kind of customers we tap into right now, say, younger customers, and I think an increasing mix towards Tier 2, Tier 3 customers. Or shall we also kind of gravitate towards maybe more higher ticket customers and be more, act like more a wealth outfit in the making? So that was, I think, my second part of the question on the assisted sales.
Yeah, so like, the target audience that we'll be targeting would be much, would be much beyond broking. As Nishant said, that we would be looking at like distribution channels where we can sell lots of other product like insurance, mutual fund, lending product, and even that will include lots of kinds of like wealth management kind of like product. So overall, the kind of end market we are looking at is much beyond that, what we were catering to previously.
And just to add to what Dinesh has mentioned. See, we are looking at various customer cohorts. So the idea is not to cater to, not to have a singular strategy for the across the entire spectrum. The idea is to create customer personas, create customer cohorts, and be able to serve them based on what they require. And therefore, to your question, answer would be that, yes, we would be serving different other segments as well, over and beyond what we currently do, and that's the whole idea of creating a wider play field.
Understood. This is, this is very helpful. Thanks. So sir, on the other couple of questions
Thank you. The next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead.
Yeah. Hi. Good morning, everyone, and congratulations on a great set of numbers. So firstly, on the interest cost, you know, you mentioned that there is some impact of the upstreaming element, then the margin trade funding book was also higher. But if I look at the interest cost, that's just gone up by INR 8 crore. And you had mentioned earlier that around INR 40 crore impact would be there for nine months just because of upstreaming. So that itself would entail around INR 12 crore-INR 13 crore of incremental cost for the quarter. That is my first question. Could you triangulate that for me as to, you know, what, how should we look at this interest cost for this quarter and going ahead?
Second is, we've seen a very sharp ramp-up in customer acquisition in this quarter. So what really has changed and what kind of momentum or, things, you know, should we look at, going ahead? And I think the previous question was also about one of the elements which was unanswered, was with regards to the volumes, that came in, as a, you know, per day, per customer, volumes have also been rising. So what is the kind of trajectory that you're looking at? And lastly, you know, you set up a new subsidiary for wealth management. What is that exactly?
You know, whether if the distribution is gonna be sitting in this company, how are you going to distribute the business of APs or online, you know, distribution business will be... Will it be housed under this subsidiary, or how it's gonna pan out? Could you lay that out for us? Those will be my three questions. Thank you.
So I will answer rest of the question. Interest cost Vineet will take that later.
Okay.
On sharp ramp-up of, retail acquisition customers and all that, that is attributed to our, shifting from, like, old app to new Super App, which has a better journey, and it has, like, lots of, kind of like, areas where customers are able to really like, and, when they look at the broking services, they're finding it easy to use our app and, be engaged with our app. So our... Based on that improvisation in journeys and all that, we have seen a huge kind of like ramp-up in NPS and all that, which clearly shows that people are liking our app. And there is always a regular word of mouth, in our market, because this market is nowadays, because of social media and all that, it's easy to understand that this app is better and people refer each other.
That is one of the reason. And second reason would be that last quarter, as we said, that we'll be spending on our branding exercise so that people know what kind of like, this, shift we have done from single kind of broking app to this, latest kind of, like, app. So that has also helped us. And plus, we had spent more this time on acquiring customers, keeping in mind unit economics, but we were able to optimize our, marketing, our acquisition through different, different channels. That's the reason I would say it is combination of all this factor that we saw ramp up in our customer, acquisition. In terms of volumes, again, credit will go to kind of like journeys that we have built.
We are able to engage customers, we are able to monitor customer journey, and we were able to build a good data science team who is helping us in terms of, giving us some kind of, like, information about customer, their profile, what they will like and how they'll get engaged more. If you look at, when we introduced this, SIP journey, that has helped us to our customer, not only to buy one more product, but this customer is engaged for one more product. That gives us more kind of time, with customer and our app. And your question on this wealth management. Wealth management, the total solution is not a distribution business.
We will be creating lots of kind of solutions for HNI, and we would like to go into a ticket size, which has been challenging in the market, how to sell a ticket size of INR 50 lakh, INR 1 crore and around that area. If you look at wealth management across market, they're focused more on INR 5 crore, INR 10 crore and above. We believe that kind of, like, technology capabilities that we have and data science tools that we are using now, we can bring to this market, kind of like, very effective product, which is effective for HNIs and ultra-HNIs, and give this kind of, like, solution to even people who want to just invest INR 50 lakh and INR 1 crore. That is our target for this wealth management. We will start in a normal way, serving HNIs and all that, with proper solution.
... we'll move towards using technology and bringing this cost of acquiring customer with this ticket size of INR 50 lakh and INR 1 crore lower and make them profitable. For other businesses, like, for product-based solutions, we have AMC and all that, so that will complete our approach in terms of wealth management. On interest part, I'll request Vineet to answer that.
Sure. Good morning, Paresh. On the interest increase, when we gave a guidance of INR 40 crore for the nine months, it was based on the assumption that the bank guarantees for client denominated funds will scale down gradually, and that's what has happened. From 1st of May 2023 to 30th of September, the scaling down has been gradual, and therefore, the cost will not be linear. Now that the client denominated bank guarantees have completely gone, the cost will be higher for this quarter and the quarter after that.
So just, Vineet, further extending that point, you mentioned, so, so this quarter still, you know, even if I assume that you have a very limited portion of that, INR 40 crore, let's assume it's around INR 5 crore, okay? So the total cost has gone up by INR 8 crore only, where your, funding book has gone up, your borrowings on the balance sheet has gone up. So somehow I'm not able to... Unless your costs have, your borrowing costs have gone down materially, I'm just trying to understand as to what really kind of, brought that, the increase or so less.
The funding book has not gone up for the entire quarter. It's towards the second half of the quarter that the funding book has grown. If you see, the average is about INR 14.5-INR 15 million or so. When you see the period-end book, then obviously it's INR 19.5 billion, as compared to, you know, INR 11.5 billion at the start of the year. It's not a sudden increase that has happened at the start of the quarter, and therefore, the funding has also—the borrowing has also increased in proportion to that. What you see in the balance sheet is the period-end number. It's not the average borrowing that you see.
So is it fair to assume that out of that INR 40 crore what you have mentioned, a good portion of, let's assume around INR 35 crore is still pending, is yet to come, or would you want to change that number or to, of INR 40 crore to a lower number?
No, I'll maintain that INR 40 crore because there is growth in business and therefore, you know, there will be requirement of margins to be placed with the exchanges. So, we would continue to maintain that guidance of for INR 40 crore or so for the, you know, for this financial year.
And just a follow-up on, sir, acquisition costs you've been mentioning, customer acquisition costs. If I just divide the total admin cost and, the number of acquisitions that made, it used to be around INR 1,500 per customer till for the past three quarters. It's coming at INR 1,250. Obviously, the base is much better because of, you know, 1.3 million was the run rate and 2.1 million is now. But is there anything else to read into it, whether the customer acquisition cost, trajectory, and this momentum would continue?
So, the admin cost is not directly for the cost of acquisition. There are other elements as well, including the operation cost towards tech infrastructure, the branding cost that is incurred, the onboarding cost that is there. So, you know, you cannot directly divide the number with the number of clients that were acquired. The customer acquisition costs have not moved significantly. It's in the same line as it was earlier. As you know, we don't disclose the numbers, so I'll leave it at that.
Thank you so much.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. Thank you. We'll take the next question from the line of Chintan Sheth from Girik Capital. Please go ahead.
Thank you for the opportunity. Am I audible?
Yeah, yeah, audible.
Yeah. So two set of questions. One is, on a bit harping on the orders, you know, for client order and all. If you give us some color on, you know, the trading difference between a mature client versus new client, as you already mentioned in your opening remarks, that the mature, two-year-older customer cohorts is, contributing more to our booking, net booking revenue. If you can provide a color on how the mature client, trade, or they order on, quarterly orders versus a new client, it gives some color that, more business is coming. Obviously, intuitively, it looks like more business is coming, but how skewed it would be? That I would like to, you know, understand.
What kind of risk do you foresee in terms of these orders, you know, softening down from the mature? Any thought process or any concern you have that this order may might taper down in the upcoming future? That would be the question. And second, on the cost side, you did mention that we are in line with what we are spending right now. I believe there will be some thought process in terms of number of customer onboarding at a aggregate level, either be it share or in the overall demat account in the country, and post which the need for spending more towards client acquisition will start to decline.
So any thought process around that, where the inflection point will come, or the target that you have internally, you know, worked out? From that point onwards, the need for investing for client acquisition will slight, you know, start to taper off. If you can provide that, you know, understanding. That these are the two set of questions. Thanks.
Yeah, Chintan, what you are looking at, very granular kind of in detail, the thing that we don't provide. What we provide it is in our presentation, slide 11. I would ask, our revenue officer, Devender, to touch upon that. But before that, let me just, cover on, like, cost side and all that. Right now, it's very difficult to say what impact, like, this thing, kind of like, we see in cost in near future. Because what we are seeing, unit economics has been very profitable. So we try to spend based on our own kind of metrics that we have, which is a bit proprietary to us in terms of how much we should be spending. So when we see there is a good opportunity to acquire customer, which are profitable, we try to place that level.
So overall, I can say, looking at under-penetration, this trend seems to be like will continue for a long time, because India, if you see, hardly 3%-3.5% people are active in this asset class.
Correct.
So if you look at the performance of this asset has been excellent, so I don't feel that there would be any kind of like clients would not look at this market for building their wealth or creating a second income. So I would ask Devender to touch upon whatever data I can provide in terms of client per order cohorts and all that. Devender?
Sure. Yeah, hi, Chintan. From an overall response of, you know, if you look at orders, from a mature clients and new clients point of view, I think... Am I audible?
Yes, yes. Yes, Devender. Yeah, please.
So, from a, from a mature and new clients point of view, as Dinesh has already mentioned that I think we came out with new journeys on the app with simplified, you know, usage for the active users, particularly, where now option watchlist has come out. And also for the new users, we have been building up new journeys, Trade Buddies and other products that we have come out. So obviously, we've improved the journeys of new users and active users very robustly on the app. And again, also use data science to customize it for different profiles of client, which has come out really, really well in terms of the eventual order that you see on the platform. Obviously, this is also supported by two major factors, like market going to all-time high, and also-
Right.
Multiple expiry days, which provides more opportunity for active traders to participate in multiple days. So these are also added on in terms of active participation of active users, particularly, very, very strongly. But if you look at from a mature and new clients point of view, we see this impact has come equally on both fronts. We have seen equal impact on mature users, which is very high active users, as well as new users who are starting to come into the market and start experiencing different financial equity services in the app itself. So these are the two prime reasons, you know, that we have seen within the system, which has helped in terms of growing the orders.
Repeat orders, I believe, will be, you know, based on the income they generate from trades, right? And given market is also supporting, supporting to some extent, the kind of ordering we are seeing right now, like, looks like, you know, to follow through, to continue. What are, from the Angel's point of view, the kind of informations and the kind of features you are providing, whether—if you can give us how profitable this newer or mature cohorts, independently, whether they are making money, which, which, which, you know, brings them back to the trading activities? Is it what we are seeing currently or any risk, anything different you are reading there?
See, Chintan, let me take this question, one second.
Yes, yes.
This market, ups and down, is not a new phenomenon.
Correct. Correct.
It was there from the day stock market was incorporated.
Right.
If you look at, like, only we shares that kind of data, what kind of like repeat business we get on year one, year two, year three.
Right.
We have to look at cohort-wise revenue, whether it continues or not, whether we-
Correct.
Look at the from bubble era or we look at, like, global financial crisis era, we have seen market really going to end zone where investor traders lost money.
Correct.
Because they come to the market with limited risk capital. Because they are earning, they are generating kind of like revenue, so they are kind of like engaged in the market, not that they just do trade, they make loss, and they style from loss.
Mm-hmm.
Based on kind of an historical trend, we have analyzed that trend in this digital era is far better in terms of repeat order.
Okay.
Because when they download an app, app stays with them.
Right.
Whenever there is an opportunity in the market, they may feel that, okay, when they enter, that time opportunity was not good and they made some losses. But they go back to nowadays, like social media, try to see what's the right approach, where they went wrong, do some back testing, and again, they're active in the market.
Correct. Okay. So the behavior has changed, which we... And the kind of, you know, the ease of accessing the trading data and app through an app is helping them to, you know, to come back to the market and access information, access to experts?
like, what we have built Trade Buddy and all that, talking to community and trying to evolve, understand. So all said and done, market has given good performance. They, they have realized it is their mistake, so they have to improve upon that. This generation, that way, is very like, proactive in terms of gaining knowledge and all that.
Mm-hmm, mm-hmm. Got it. I'll join back in. Thanks, thanks for the insight.
Thank you. We'll take the next question from the line of Bhuvnesh Garg from Investec Capital. Please go ahead.
Yeah. Thank you for the opportunity, and congratulations for a very good set of numbers. Sir, a couple of questions on your new businesses. Firstly, on the lending products distribution, we just want to understand what would be your role in the partnerships that you had mentioned in the presentation that through AI and ML models, you would be creating profiles of your customer? And just want to understand, what would be your role in that partnership, and what type of products that you will be offering to lending platform? So, yeah, that's my question.
Yeah, sure. So Saurabh handles, heads our this, new business division, so I will ask Saurabh to answer this.
Hi, Bhuvnesh. In terms of the product that we'll be offering, to begin with, it will be consumer personal loans, unsecured consumer personal loans. The kind of partnership that we'll be having with the lending banks or NBFCs will largely be in the capacity of a distributor. But we don't want to intend to just be a vanilla distributor. We want to give all the intelligence that we can to our lending partners to help them underwrite better, to help them collect better, so that their portfolio performance increases, and which in effect will mean we can also benefit from better commissions from them over time.
Got it. Got it. Sir, any particular targets we have in this lending space in terms of per year or more in terms of revenue where we want to reach over the next three years?
So actually, we can't give out that number, but we have very steep aspirations with respect to the credit business. We'll be... We'll start slow to ensure that we have delivered the best experience to our customers and scale significantly for that. There is, tremendous potential to grow the retail credit business in India.
Got it. Got it. And sir, second question is on our wealth management business. So if I heard it correctly, you said that you will be targeting customers in INR 1 crore-INR 10 crore ticket size, right? Is that correct, sir?
Let me just start that. See, today, if you look at wealth management business now, like, it is mostly focused on HNI and ultra-HNI, where average ticket size is INR 5 crore and above. So we'll start our journey because expertise lies with people who are managing funds at this ticket size. But we believe Angel has a unique capability-
Ladies and gentlemen, the management's line has been disconnected, Mr. Dinesh Thakkar. Kindly stay connected while we try to reconnect them. Ladies and gentlemen, the line for Mr. Dinesh Thakkar has been connected. Over to you, sir.
Yeah. Sorry, Bhuvnesh, for this. So what I was trying to say that this wealth management piece currently is solved for only HNI, ultra-HNI, in a very effective way, what we call, where they are able to handle wealth in a right perspective. But if you look at India, India is market where actually we must be able to give similar kinds of solution and wisdom to lower ticket size, like, INR 50 lakh, INR 1 crore kinds of ticket size. So we would like to use the same kind of like solutions what is provided by good wealth managers, use our technological, capabilities, use data science, so that we are able to have an access at a lower cost, give solution at a lower cost.
Plan would be start as a proper traditional wealth management business, but try to use our technology and data science people so that we are able to serve a lower ticket size, middle value, which is growing at a rapid speed.
Got it. Understood. Sir, any particular targets we have for wealth management over the next three years?
No, I think we are expecting that we'll make kind of like more announcements by last quarter of this financial year. Until now, we have just formulated our ideas and what we want to do, but we have to really get into the market to create a proper kind of strategy and how to go about go to market and all that.
Got it. Got it.
The next year, some announcement from us maybe by the last quarter of this financial year.
Got it. Thank you, sir, and wish you all the best.
Thank you.
Thank you. The next question is from the line of Sanketh Godha from Avendus Spark. Please go ahead.
Yeah, thank you for the opportunity. Sir, so the first question is on some data keeping questions. Basically, given the other topics, it has grown significantly year on year in the current year. So just if you can give how much, what, what-
I was unable to understand you. Your voice was getting crackly. Please, can you repeat it?
Yeah, yeah. The question I was asking, sir, was that, given we have seen a strong growth in other OpEx in the current year, just wondering, last, we believe the last part of the growth could be driven by advertisement expense. So can you just highlight how much we have spent on those advertisements? And then how sustainable it is going ahead? That's point number one. On the data keeping, I have two more questions. One is, if you can break down that INR 8 crore expense increase in the interest, can we safely assume it is largely because of the ups, the changes with respect to upstreaming of the client money or bank guarantee not available?
Lastly, given the chairman has spoken about instantaneous settlement, just wanted to understand the impact on us if the float income or what kind of float income we earn on the client money, which could potentially disappear if instantaneous settlement gets implemented. That's on data keeping. I have a couple of questions on authorized channel, assisted channel, maybe after you answer this, I can ask that one.
Yes. Vineet, can you take all these three questions?
Yeah. So, about the cost that we've incurred on branding, we don't disclose that, Sanketh. So, it's built in the other expenses. As I said, majority of the expenses increasing the expenses towards other expenses has been because of the growth in the client acquisition, or, you know, from 1.3 million - 2.1 million, plus the onboarding cost. And there is the cost that we've incurred for the branding campaigns that we've run during the quarter. That's on the other expenses part. On the interest, again, I mean, I'm sorry, I can't disclose much details beyond the data that we've shared.
As I said, the increase in the margin requirement will go up with the client denominated margins, bank guarantees getting abolished from 30th of September. There will be this incremental cost on the borrowing and the BGs for the next two quarters. We've given a guidance for INR 40 crore during the nine months, till 31st of March, and we maintain that.
Lastly, Vineet, on the float income on client money?
Well, that's something which will pan out during the in the future. Right now, we have already shared a lot of information about the kind of, you know, income that we generate from clients' margins, et cetera. But, as and when the instant settlement gets implemented, we'll see how the margins move, and then we'll be able to give a guidance on that.
Okay, perfect. Sir, the last, the second question, which I had was on the authorized channel, or assisted channel model. Given we have been incrementally focusing on this business, to the extent I understand, this is a pass-through model. Suppose if you are earning INR 100 by distributing a loan or a mutual fund or doing any product on financial or on insurance in that sense, if you are earning INR 100, probably you need to pay INR 90 or INR 95 to the authorized person, and INR 5 is what you might retain. I just wanted to understand how exactly you are going to build this model.
If I look at this model in silo, then is it safe to assume that the EBITDA margins of this business will be invariably lower compared to what you do in the direct business model right now?
Yes, I think you have to look at this model in a different way, because when we talk about margins and all that, we don't take the cost. So that cost is taken by our assisted channel business partner and all that.
Yeah.
So that way, this model is very profitable and very kind of helpful in terms of cyclical times and all that. Because all costs are taken by our business partner. So what we bring on the table is like affiliation with good manufacturers, where because of scale, we are able to negotiate a better price.
Mm-hmm.
Second, we are able to use, kind of like, solutions that we have, and we can, customize, to the level where our, business partner will be able to serve their customer better using our, AI/ ML tool and data science that we apply in our platform. So we bring in lot more than just kind of like giving an access to some manufacturer. But when it comes to managing customers, asset, portfolios, distribution, understanding, being more intelligent in terms of understanding asset allocation, that is where our USP comes in. That is where a platform like NXT and Visa are used, so that some, this, kind of assisted, business partner is able to acquire more customer at a lower price.
He is able to get more, kind of like, creative material in terms of communicating with the customer and acquiring more. When it comes to serving also, we are able to tell him what are the product in the market and how each and every individual's portfolio is performing. That's a huge kind of support which, kind of like, channel partner gets. Nishant, if you want to add anything on this?
Sir, just to follow up on that. Given in our broking business, to the extent I understand, it is 70/30 sharing. So, do you expect that 70/30 sharing to operate in this other products also? Or it will be different meaningfully from what we experience in broking business?
So Nishant, so that every business model is derived by what kind of an investment we are doing and what is an ROE to that.... So what we look at any business, where there's a huge opportunity of deploying our kind of like OpEx or CapEx, which generates a reasonable, good, decent kind of like, returns, and it is scalable. So we would like to focus on that. Margin is not that important. Say 70/30, it can be 50/50, it can be 90/10. But what is important is that what is the scale of that business and what we are bringing on the table, and what kind of returns we'll get on investment we are doing.
So I think because all these businesses does not require huge capital, so ultimately it boils to business which is more sustainable, because when we acquire this business partners, they are in the market for like... We have seen our business partners being in the market for like 10, 10, 20, 20 years. And plus, whatever margins we share with them, ratio is such that we both are profitable. So in that sense, it is not less profitable. It is kind of a thing which is required to gain more market share in whichever business you get into. To have a kind of like diversity in terms of acquiring customer from whichever channel they want to use our service. So objective of being into assisted business, the thing is much wider than just looking at margins.
I believe that India is still like, there are digital natives, there are people who want assistance, and those who want assistance is also a big market.
Yeah.
Combined with technology platform, what we can give now, it can create a very unique USP. Yeah, Nishant?
Yeah. So just building on what you just said, sir. See, I mean, there is a role that channel plays, and the role that is, like, acquiring customers and bringing them onto our fold is primarily what they are focused around. And what the role that we as service providers play would be kind of creating those products, creating those customizations, to be able to cater to that specific need. And therefore, both the parties involved are adding value, and therefore they are being reimbursed or they are able to charge for the value that they create. I think I would like to look at it from this perspective, and not from a margin-sharing perspective.
Got it. Got it. Perfect. And last one.
I'll give you a specific example, for example, for that matter, to kind of help you internalize this point. Let's say, as far as the lending model is concerned, and let's say if I was to tomorrow tie in with the DSAs of the world, and I play a role of a LSP, a loan service provider.
Yeah.
Now, in a scenario where I help them identify a specific cohort where we are able to charge a specific rate of interest, and therefore creating enough lubrication in the system for them to be able to charge their DSA fee, which they in any case would be getting, and on top of which I'm able to add value by that specific cohort and fulfill. And therefore, I'm able to bring in my margin. It could be in form of LSP. To add that one is creating, and the overall proposition therefore becomes more robust.
Got it. Got it, sir. Perfect. And lastly, given you have raised on the lending point, just wanted to check that if the loan market you want to get into, whether ultimately you will even start a payment aggregator model, where the throughput through your channel will be significant, and therefore the personal loan disbursement thing can be meaningful, or you want to be a pure DSA or an aggregator of the DSAs kind of a?
Well, this is a wider question, and I would request Dinesh you to respond on this.
Yeah. So we would always like to be a distributor of this product. We see a big opportunity in lending. If you look at lending market currently now, so like, what is missing is last mile kind of like approach to a customer who are into remote areas and all that. And when you look at digital natives, young people, they want to consume everything on digital platform. So we would not like to underwrite risk and all that, where we don't have the competency. Our competency lies in creating an access to the market, creating a huge distribution network, and co-sharing that kind of like revenues with our manufacturers who are expert on risk management and collection and all that.
Regarding your payment aggregator question, see, I mean, there are different signals that different companies use for underwriting purposes.
Mm-hmm.
Now, given that we are not necessarily into the underwriting part, I am not sure if that is a signal we are using. I mean, payment aggregator using the transactions is able to underwrite the customer who's actually intending to borrow. So the perspective changes.
Got it. Got it. Perfect. Thank you very much. That's it from my side.
Thank you. A reminder to all the participants, anyone who wishes to ask questions, may press star and one. We'll take the next question from the line of Hardik Jain from Whitestone Financial Advisors Private Limited. Please go ahead.
Yeah, good afternoon, sir. Thank you for the opportunity. So this expiry changes happened, I think, from the 1st of September. So if you can just give us the understanding how the volumes have moved off in the month of September versus August, because I think now it has become a regular feature, and it will give us some kind of assessment how the volumes can move in this quarter also. So this is my first question. And sir, in terms of ancillary revenue, you said INR 90 crore is the kind of refund that we get because of our turnover. So I just want to understand, isn't it required by the regulation to charge on an actual basis to the client the turnover charges? So that is my second question.
Secondly, sir, you have also mentioned that we earlier were not able to give Sensex futures and options on our system, which has started, which you mentioned in the presentation. So, when did it start? Did it contribute something to the revenue in this quarter, or it started after the quarter? So, yeah, these were my few questions.
Yeah. So on expiry, we would not be able to comment much on that, because this all changes which happened has been factored in our quarterly results. So you have to take some information based on numbers that we have shared. And on charging our, the thing, rate to customer, we charge as per slabs. And like that is where there is kind of like whatever is like applicable to different different traders. Based on that volume, we charge that, so it is in line with regulation. And third, SEBI, sorry, BSE, we started just last week. Still it is not fully rolled out, so impact of BSE is not fully seen in our this quarter result.
Okay. Thank you, sir.
Thank you. The next question is from the line of Sarvesh Gupta from Maximal Capital. Please go ahead. Mr. Gupta?
Good afternoon.
Yes, sir.
Good afternoon, sir. Thanks a lot for taking my questions. I think most of them are already answered. Congratulations for a very good product. Nevertheless, one question that I had in my mind was on this unique SIP registered. So, you know, this is certainly you know, reaching a very significant sort of a scale. So at the moment, have you had any sort of a discussions with the AMCs or thoughts, any, you have some thoughts about how to monetize this thing? Also, you know, given that you are also going to launch your own AMCs, do you see any play between these two? And how do you see any monetization overall to come up in this sort of a segment?
Yeah, so, thank you for your questions. See, if you look at, like, our discussion, like, since few quarters, we were focused on Super App, and we strongly believe individual who comes on our platform, he should get everything, which, that person needs to achieve his, financial goals and all that. The first step was, like, after broking, to introduce, some other kind of asset class where we see some, traction. The positive thing is that, we were able to see people like, more services on the same platform. That's the reason we just launched in April. In six months, we are number two in terms of unique, SIP registered.
So that clearly shows that people who are on one app, they are ready to buy multiple services, multiple products, provided we are able to give a right journey. So that is where our uniqueness in terms of building a Super App, building an engine, which is more guided by data science and AI/ML tool, is very effective in terms of understanding what the customer wants and serving it at the right time. So we don't look at earning from every transaction. What we look at, that customer should be engaged on our app. If that person is engaged, today or tomorrow, they are going to consume more, consume more services on our platform. Some products can give us good revenue, some products may give less revenue. But overall, what is important? What is cost of acquisition and what is the lifetime value of this customer?
So we believe until now, none of the industry has really focused on lifetime value, which is much beyond what we can imagine. So because we are acquiring customer who is of the age of 25, 26, if you look at their lifetime value, it will be much beyond than what we are currently projecting. So today, if you look at, like, we have given numbers on that, our cost of acquisition to until now, in three years, we are able to recover almost 8x from our cohorts. But if you are able to add few more services, create more engagement, more stickiness, we believe that this parameter would have a positive impact. So that is where our focus is. Now, your question on our own AMC. Yes, we believe our AMC would be totally on passively managed fund.
I believe that passively managed fund is a right product for young individuals who are starting their journey. One, because ETF is an easy product, diversified product, and it's easy to divide it into steps and invest regularly. So definitely being into passively managed fund, what is going to help us is our distribution network, which is huge. So that way, there is a synergy, there is a kind of like advantage position that we have, and we are going to leverage that.
Understood, sir. Thank you and all the best.
Thank you. Participants who wishes to ask questions may please press star and one. We'll take the next question from the line of Varij Bangur from Pico Capital. Please go ahead.
Hello?
Yeah.
Yes, sir.
Sir, just wanted to ask on one thing. From first July, I think the lot size of Bank Nifty has reduced from 25 to 15. So is there an impact of that also? Because a same trader would have to put in more number of orders for the same value that he's going to trade. And from that sense, would it be structural going forward as well? Because that number would remain same, right? From July, August, September to the coming months now on.
Bhavin, can you take this question?
Yes, sir. So, see, the Bank Nifty contracts has definitely changed from 25 to 15.
Mm-hmm.
But it has got actually added in the number of trades that we have been reporting till now. So, obviously, there are a set of customers who would want to actually trade a particular quantity. For them, the number of orders would have gone accordingly. But, to see whether this impact has actually caused the rise of orders would be, we will not be able to mention on that particular thing. But yes, there are certain customers who place orders based on number of lots. There are certain customers who place based on the number of quantity that they want to take it. Yes.
Fair enough. Thank you. That, that answers my question. Thank you.
Thank you. We'll take the next question from the line of Pallavi Deshpande from Sameeksha Capital. Please go ahead.
Yes, I just wanted to understand on the ESOP cost, if we've had these new hirings, so what would be the cost we can factor in for the year?
Vineet, can you take this question?
Sure. On the ESOP cost, the guidance remains the same. Overall, for the year, we had estimated the cost to be about INR 80 crore. The cost for new ESOPs that we have granted and expect to grant will be in the range of about INR 55-INR 60 crore. We maintain that same guidance.
Right. And secondly, on the ad spend, I think, you mentioned that, you know, will that be ramping up now with the, you know, these new businesses coming in, the loan business and, AMC? Do we see a ramp up, further ramp up in bank from the current trend?
So, for the lending business and other distribution businesses, we are actually not spending money to acquire those customers. We already have a large enough customer base internally, who we could cross-sell and create a large enough portfolio there. So in terms of spending money to acquire customers this year and hence brand spend increasing, that won't happen.
Okay. Right. Thank you so much.
Thank you. The next question is from the line of Bhuvnesh Garg from Investec Capital. Please go ahead.
Sure. Thank you for the follow-up. So just a data keeping question. Firstly, if you can provide the interest rate that we charge on our MTF book, and secondly, if you can provide the breakup of our interest income into our MTF income and then, FD, FD interest income. Yeah, these two questions.
Vineet, please take this question.
Yeah. We charge 18% annual for the MTF lending that we do. And of the total interest income that we have reported, almost 65% is from the fixed deposits and margins that we place with the exchanges, and about 35% is from the margin trading.
Got it. Yeah, that's it. Thank you, sir.
Thank you. The next question is from the line of Rucheeta Sharad Kadge from iWealth Management LLP. Please go ahead.
Hello, sir, good afternoon, and congratulations on a good set of numbers. So I wanted to ask, sir, when, when do we see this AMC, the lending and the wealth management business starting up? Sorry if I'm repeating the question, I must have missed it. So if you could just give a little clarity on that.
No, sure, no problem. On AMC and lending, I will ask Saurabh and Vineet to take this question. On wealth management, it is too early to say comment anything on when it will start. So right now we are at a kind of like conceptualizing kind of stage. So maybe you will hear more about this wealth management in next quarter in detail. On AMC, Vineet, can you just elaborate and on lending, later on then, Saurabh can add.
On the AMC business, we've already filed the application for final approval early August. We are in the process of building up the business infrastructure and the tech infrastructure and creating partnerships with key vendors. We expect SEBI to conduct an on-site inspection once we are ready with the entire infrastructure and the team in place. And thereafter, usually it takes about between one to two quarters for SEBI to give their final approval. So, most likely, we should be able to, we endeavor to get our final approval either in the fourth quarter or early first quarter of the next financial year.
On the credit business side, most likely before the end of this fiscal, we should be able to go live.
Okay. Okay. Understood, sir. Thank you so much.
Thank you.
Thank you. The next question is from the line of Sumit Jankar, an individual investor. Please go ahead.
Thank you for providing me the opportunity. My question is related to ARPC. Can you provide the numbers for this quarter and previous quarter?
I'm not sure. Devender, do we provide ARPC?
No, we do not provide this information, and this is internal information. So we don't provide any such information here.
Okay, sir, I have one more question related to derivatives market share. As I can see, the derivative market share is all-time high. So can you mention some reasons which helped you to gain a 26% market share in this quarter, which is up by almost 200 basis points as compared to previous quarter?
Uh, Devender?
I think, as mentioned earlier, we had a number of, you know, product journey improvements that we have done on the product front, which is helping the active users to engage in a much more wholesome way. Which has now started contributing in the right way, in terms of participation. That has been the major impact now, where, we have made sensible free, we have got basket order, we have got options. So there are multiple, product journeys improvement that we have done, which is causing easier, usage by users who are active users particularly. So that is what is majorly, you know, helping the overall movement of, the derivative market share as well, as a result.
Okay. I have one general question just to ask. As you have good market share in derivatives, currently recently five to six months ago, the SEBI made a report on derivatives profit and loss of retail customers. Which said that 89% of clients made loss. And so can you tell, so derivatives is a zero-sum game. So is it that the remaining 10% are earning the losses made by 90%, or is it that the DIIs, FIIs, or banks who are also trading individuals, they are receiving the profit? So what is your take on this?
So, Sumit, it's a good observation. I think, report does not give detail about, if nine are losing, as you said, it's a zero-sum game, minus expenses, where the other part is going. It can be going to people who are into kind of like arbitrage business or FIs who are hedging. But I think this report is not clearly mentioning that side. So it... I would not be, like, we would not be the right person to answer this. You have to check with the regulator on that.
Okay. Thank you, sir, and, congratulations for good set of-
Thank you. Thank you very much.
Thank you. The next question is from the line of Hardik Jain from Whitestone Financial Advisors Private Limited.
Yes, just one bookkeeping question. So how much cash would we have on our books, other than the client margin, so our own cash?
Sumit?
Today we deploy about INR 1,500 crore-INR 1,600 crore of our own cash, other than the money that is there in long-term investments and assets. So this is the money that we deploy for margins and for the other working capital requirements.
Thank you, sir. Thank you.
Thank you. The next question is from the line of Pallavi Deshpande from Sameeksha Capital. Please go ahead.
Yes, so just wanted to understand on the loan business, would we be then targeting, since you said it's a cross-sell, more of the Tier 2, Tier 3, customers, and that would be pretty unique to ask them?
Sir?
What is the question, please? Can you-
The loan business. For the loan business, since you mentioned it's going to be more initially the cross-sell. So does that indirect- That implies that we will be having more Tier 2, Tier 3, and Tier 4, kind of, customers, for that.
Since we are not acquiring customers for lending, we are cross-selling to our current base. Whatever the composition is of the base, that will be the composition of our lending business as well.
Right. That's an area pretty much ignored by the current FinTech players. I mean, even in terms of credit risk.
That is where the opportunity lies, right?
Right.
One, the market itself is under-penetrated, and more and more lenders and issuers want to enter that market. And since we have a very highly engaged base in those same geographies, we have a very high potential to capture that market.
Right. Thank you so much.
Thanks.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Dinesh Thakkar for closing comments. Over to you, sir.
Thank you for joining us on the call today. I hope we have been able to answer all your queries. Should you require any assistance, please feel free to get in touch with Hitul Gutka in IR or SGA, our Investor Relations Advisors. Good day.
Thank you, sir, and the members of the management. Ladies and gentlemen, on behalf of Angel One Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you!