Q1 20/21

Jan 12, 2021

Thank you very much, operator, and good morning, everyone, and most welcome, both to our existing and new and potential new shareholders, to our Q1 presentation and conference call. I hope you're all well and have a good morning. Despite the continued difficult time in our history, Here on our side of the call is myself, Thomas Ekman and Johan Karlsson and Pritik Dattescharm in the room as well. So today, we present our Q1 results for our fiscal year 2021. We are, as you know and all of us are doing, we are navigating ourselves through our different markets through the current fairly terminal conditions. But I'm very proud of our achievements everyone adapting for their strong contribution in helping and supporting our customers and continuously enable them to stay in the forefront, especially, of course, when also that hard work shows up in the numbers. The 5 market trends that we are, for the last couple of years, have built our strategy on, I. E. Online shift, the growth in mobility and cloud services, demand for predictable IT costs, focus on security and integrity and last but not least, of course, sustainability. Those trends have all skyrocketed during the pandemic, and that makes, of course, our long term position even stronger. But with that said, let's go into today's presentation and over to Slide 2, Dustin at a glance. This you have seen before in this picture. So just as a refresher, and after the holidays here now, we are by far the biggest detailer in the our products and with the largest assortment within IT. And we provide fast deliveries, great customer support and competitive pricing. Sweden is our biggest market with 40% of sales and with the other Nordic countries between 15% 20%. And the Netherlands, which we entered 2 years ago now on 7% of sales. We are, of course, developing ourselves and offering our range of service offerings. Currently the split between hardware and software and services is SEK 83,000,000 versus SEK 17,000,000. And last year's revenues full year revenues for SEK 13,200,000,000 delivered by around 1800 colleagues around in our footprint. But then moving on to Slide 3, and for the financial highlights to see how we are improving and performing now during Q1. We continue to strengthen our total market position fight the current uncertainty. Net sales for us was nearly SEK 3,700,000,000, up with 5.3% versus last year. The organic growth was up 8%, which of which SMB showed a positive 7.1% S and P, 8.2% and B2C, 16%. Erb. So overall, strong organic growth in all segments with an increased activity level among all our customers. Gross profit was SEK 577,000,000 compared to last year's SEK 560,000,000 and that gives us a gross margin of SEK 15.6 slightly down were from last year's 'sixteen, but sequentially up from Q4. Our adjusted EBITDA came in at SEK171,000,000 versus last year's €156,000,000 which is a good uptake also on EBITDA and that gave us an adjusted EBITDA margin at 4.6% for the quarter versus last year 4.5%. And that's also sequentially improved since Q4. The margin is improved by, of course, good performance overall and the structure changes we are doing, combined with good cost control within all segments, both SMB and S&P showed good progress in margin update. We have also done changes in our marketing mix during the quarter where we will close our business center in Stockholm. We phased out some marketing functions, and we'll also shift our marketing mix more towards building our brand in line with our updated position. And with these changes comes items affecting comparability at SEK 13,900,000. And that gives us an EBIT of SEK 1 100 SEK32 1,000,000 compared to last year's SEK180 1,000,000. Cash flow from operating activities was SEK 265 1,000,000, up compared to last year's SEK225 1,000,000 and EPS earnings per share also up to SEK102 1.02 per share versus last year's NOK 97,000,000. And our leverage is at 2.2 versus 2.6 than last year, the lower part of our leverage target, which is between 23. And Apart from an intense quarter overall from an operational perspective, we have, as we have previously announced, acquired the Danish company, Exalta, during the quarter. And to remind you on that, Axalt is specialized in standardized services such as security and infrastructure, primarily within the Microsoft suite. Roughly half of the income comes from subscription services, and Exalta will complement our portfolio, first of all, of course, in Denmark, but it will also strengthen our capacity and our and complement portfolio further on of managed services in our other markets as well. So that is very exciting, of course. But Johan, can you take us through the financials for different segments? I will. And then please move to Slide 4 and the SMB segment in some more detail. So sales for the quarter in SMB ended at SEK 1,622,000,000,000, an increase of 4.3% over last year, representing an organic growth of 7.1%. The acquisition of the Danish service company, Exato, affected the quarterly sales numbers with 0.7 percent or SEK 10,000,000. Sales improved significantly from Q4's negative organic growth of 2.6% as our customers were coming back to purchase. In the quarter, the hardware sales were strong in all markets, and particularly, the small and midsized customers showed increased purchase need. Geographically, we saw good growth in all markets, but especially in Norway, growth was strong. The services sales still affected by the pandemic as sales cycles are longer and the willingness to change supplier is lower during the pandemic. Further to that, our many customers still restricting access to their offices. Segment margin for the quarter was 10.0% compared to last year's 10.1%. If you then compare to Q4 sequentially, we saw a fine increase from 8.3% and further improve from 7.8% in Q3 last year. The main reason for the good margin was effects from cost reductions made during last year. It was also very good development in the private label sales and scale effects as volumes were increasing. Sales mix with more basic hardware and less project related sales had a slight offsetting effect on the margins in the quarter. Services and software sales as part of the total sales was at 21.2% during the quarter compared to SEK 23,600,000,000 last year. In total, segment results ended at SEK 162,000,000 compared to SEK 150 SEK7 1,000,000 last year or an increase of 3.3%. All in all, a strong sales performance in SMB where we, in previous quarters, have seen more effects from the pandemic. So then move to Slide 5 and the LCP segment. So sales to large corporates and public was SEK 1,907,000,000 in the quarter, an increase of 5.6%, of which 8.2% was organic. During the quarter, we saw continued good sales to the public customers and encouraging increasing trend towards the larger corporates. However, still sales to the corporate customers are lower an activity level compared to the same quarter last year. And so far, a more focused on basic hardware such as PCs and mobile phones. Geographically, we saw good sales in the markets with high public share, such as Denmark, Finland and Norway. Segment margin ended at 6.7% compared to last year's 5.5% and following Q4, 6 0.1%. The increase over last year is mainly explained by generally improved margins in some of our larger contracts, scale effects from high volumes and some of the effects from last year's cost efficiency activities. Segment result improved by 27 percent from SEK 100,000,000 last year to SEK 127,000,000 this year, continuing the strong performance we have seen in the LCP segment during the last four quarters. We then move to Slide 6 and B2C. As Thomas said, we had a very strong B2C quarter. From a sales perspective, we total sales was SEK 168,000,000 compared to SEK 148,000,000 last year, which was an increase of 13.4% and that resulted in an organic growth of 16%. Main reason for the sales increase was the Black Friday calendar effect our existing and new and potential new shareholders to our company, with more sales days in Q1 and the overall trend towards more online sales during the pandemic. The segment margin was up from 6.2% last year to 6.3% this year as a result of strong pricing discipline and cost our control. Especially successful was the margin work during Black Friday campaigns, where a good product mix affected margins positively. Moving on to Slide 7 and net working capital. Net working capital was negative SEK 5.35 SEK 31,000,000 compared to last year, negative SEK 157,000,000. Again, our strong position in the value chain continues to give us the opportunity to push working capital to low levels. We have continued the work with our partners in distribution and maintained payment terms from previous quarter. Further to that, we have utilized opportunities made available by the authorities in all our in many of our markets to delay tax our payments by SEK 135,000,000 Further to that, our customers continue to maintain the high payment discipline we have been used to over the years. All in all, this has made it possible for us to maintain the low level of working capital during Q1. If we then look at the details, we can see that inventory was down by SEK 52,000,000 compared to last year, mainly as a result of good demand during the quarter and some delays in deliveries that could explain the difference from last year. Accounts receivable was down SEK 75,000,000, mainly as a result of better payment discipline from customers but also coming from a customer mix with less corporate sales that is possible a positive to the payment base. Looking at accounts payables, which was SEK 172,000,000 lower than last year, which is mainly an effect of a different supplier mix. In total, we continue to see strong performance in the area of working capital. Then moving on to net debt and leverage. As Thomas said, leverage ended Q1 at 2.2 where our target is to stay between 23. The main reason for the decrease from Q4, which is 2.6 was the increased result and the good cash flow mainly coming from the working capital development. We then move on to Slide 8 and cash flow and investments. We can see that cash flow for the quarter was SEK 176 SEK 6,000,000 compared to SEK 109,000,000 last year. If we look at the parts, you can see that cash flow from operating activities before change in equity capital was was SEK169,000,000, which is the same level as last year. Change in net working capital was positive, SEK96,000,000 compared to SEK55,000,000 last year, with the main difference coming from change in inventory and current liabilities. Cash flow from investment activities approximately SEK 39,000,000 this year. And cash flow from financing activities was negative SEK 37,000,000 which was in line with last year. Total investments amounted to SEK 53,000,000 compared to last year's SEK 62,000,000 CapEx related to IT development amounted to SEK 8,000,000 compared to SEK 12,000,000 last year. And investment in assets related to service delivery increase from SEK6.5 billion to SEK11.7 billion this year as the centralization of the data centers is continuing. All in all, SEK 13,000,000 out of the SEK 53,000,000 in investments was affecting cash flow. The others were changes in lease or rent contracts. And that concludes and we'll go back to Thomas. Very good. Thank you very much, Johan. And then over to Slide number 9. As you have seen previously, we have and are, of course, continuously doing both the structural changes and changes in our way of working and in the delivery of our offerings. And just to update you on the progress of 3 important ones of those. As you know, previously, we grabbed the opportunity during the spring to increase the pace of implementation of our strategy within Services and Solutions, and we closed 14 local offices and reduced our workforce. This is expected to generate an annual saving of SEK 40,000,000 and it had the full effect during the quarter now. Further, we have since June our new robot solution in place in our central warehouse and we are really getting to know each other and getting along well, the robot and ourselves then. We had a target that the robot should handle 75% of all the order life, but during the quarter, we have optimize that even further. So now it handles well above 80%. And this is, of course, very good and will further improve the customer experience. And from the robot, we expect around SEK10 1,000,000 in annual savings, and we also have a full effect on that in the quarter now. And then to our consolidation of our data centers, where the consolidation as such now is completed in all four locations, And we are now migrating our customers over to the new technical design in a new environment. And this we expect to be ready by in Q3. And here, we as well expect to generate an annual savings of SEK 10,000,000 with full effect from Q3. Continuing then over to Slide 10 and our updated sustainability targets and commitments. By 2,030, we aim to have a 0 carbon emissions throughout our value chain. We will have a fully circular offering, and we have, by the time then down 100 initiatives and actions to improve social equality. And these commitments are I mean, we have designed them to redefine the impact of our business and how we behave and how we act. It will, of course, naturally involve a lot of innovations and solutions that we so far do not know of, but we will over time and with those around us throughout our value chain. But again, hard work will pay off and we see that these commitments really keeps us or not only us, but also our whole sector moving forward. Our initial focus on these three areas are, If we start with climate, it is to expand our partnerships with our supply suppliers, distributors and freight carriers. We are continuously integrating our commitments into our business and our strategic planning. Target for the year And this year is to complete the transition to electricity from renewable sources in all our premises and that also 28% of our sold products must carry an eco label. To that, we are also detailing the plan to reduce the total our shareholders in our full value chain. On circularity, we will focus on broadening our partnerships in all markets to promote increased collection of end of life returns for reuse and recycling. And that, of course, builds on our success with our take back as a service, which we implemented a couple of years ago and that we, of course, we continue to offer. If we then move forward to on social equality, we continue to conduct regular factory audits among our manufacturers. Target is to do 8 20 audits during this year. But we and we will, of course, continue that new suppliers also adopt to our supplier code of conduct and where we are right now at 99.8% of that, aiming for 100%, of course. In this work, when we do that, we also do a risk assessment to evaluate our suppliers' ability to long term also comply with our code. But all in all, these are strong commitments that will require as I said, it will require hard work, but that's what's needed. So over to Slide 11, and let me sum up our Q1 and our fiscal year of 2021 before we go into questions. Net sales grew with 5.3 percent to nearly SEK3.7 billion, where organic growth for the group was 8% with SMB at 7.1%, LTP at 8.2% and B2C at 16%, a good strong organics all over. Gross margin at 15.6% versus 16% last year, down slightly due to mix effects with higher share of basic hardware and lower share of project related income as Johan was into as well. Adjusted EBITDA came in at SEK171 1,000,000, giving us an EBITDA margin at 4.6 percent, an increase from last year's 4.5% and sequentially also up from Q4. The initiatives and actions we have taken on the cost side, both strategic ones, structural changes and the short term has, of course, given effect and that is good to see. EBIT came in at SEK 132,000,000 and EPS at SEK102 per share. And on balance sheet, operating cash flow SEK 265 1,000,000 and leverage at SEK2.2 million, just in the lower range of our target. From the operational side, we acquired Exalta in Denmark. And as said also, we implemented changes in our marketing mix. And as a consequence of that, we closed our business center in Stockholm. I mean, that also that business has served us very well during the years, but the increased pace of digitalization has changed our customers' behaviors, and therefore, we are changing as well, of course. So to summarize the quarter, I mean, the corona pandemic and its effect, of course, naturally dominate. It is a challenge both in our markets and society, and it continues to be short term disturbances in the supply chain, which we work heavily on. However, we have also demonstrated great things, I would say, with the speed at which all colleagues at DASFIN have adjusted to meet the needs and of our customers, both in the short term, but of course also to adjust to the long term behavior change brought to both us on by the increased pace of digitalization. So with the good organic growth and earnings trend in Q1, we see that we are correctly positioned our base also on the trends, underlying trends that builds up our strategy. We have a strong and unique digital relationship with hundreds of thousands of customers and even more now optimized e commerce platform as well as the ongoing buildup of our standardized services and the offerings to further increase our relevance and benefits for our customers. And that combined with our strong financial position meet that we are well equipped to face the opportunities and, of course, the challenges that is presented by the business, by the overall environment, our customers. So with that, Johan, we are very happy to take any questions you might have. Our to our. Our first question comes from the line of Raimo Correa from SEB. Please go ahead. Thank you, operator. Good morning, gents. Herb. Thank you for the presentation. I guess I only have one question allowed. So I'll ask one about the large corporate sales. You're writing in the report that you're seeing sort of a significant improvement quarter over quarter, Europe. But activity remains low. How should we read that sort of debt development? And what's the difference between activity and sales, if you will. On the large corporate side? Yes, exactly. Yes, exactly. Yes. But as to I mean to what we said before and so we've heard also before, Aelis, that of course, as we see the movements and the changes in customer behavior usually comes first in SMB and then the larger corps is slower in breaking, but they're also slower in starting up. So and that is what we see. We can see that the underlying tendencies are coming on the large corporates, but they have been a bit slower than the SMB side. And the sales cycles are longer. So activity means that they've started to consider purchasing. And some of them have actually done it, but others are in the process of doing it. Can I just ask a follow-up on that? I mean could there be any pent up demand from well, you're mentioning Denmark, Norway and Finland in particular being strong. Could it be Europe. And I mean, those three countries were more impacted by lockdowns than Sweden was. So could there be any pent up demand component in this equation? I think on the public side, not so likely because they have continued in a very good speed during this year during last year and the beginning of this year. Probably on the corporate side and on the SME side, you would see tendencies of that. And I think part of that we've seen in the SMB side. But of course, that might I mean to follow that. It, of course, depends on how the large corporates how how we will behave if how much will you provide your employees with home office equipment now when we come back to a sort of a normal or a new environment. And that, of course, is a good opportunity for us to provide that. So we'll see how that development goes on. That's very clear. Thank you. I'll get back in the line. Yes. Sure, sure. And the next question comes from the line of Daniel our Thorsten from ABG. Please go ahead. Yes. Hi, Daniel here. Thanks for taking my question. So I start out with 1 on the supply chain. We see some negative comments about the supply chain during December and freight rates are shooting up. And you also show that your inventory was down already in the end of November. Is this something that you have seen accelerated in December for certain products? And is this a potential risk for meeting client demand short term? I think what we have seen is that the global supply chains are in a bit of a, let's say, chaotic situations. Yes. We have managed it relatively well, I would say, because remember that the way we sell to the SMB customers primarily is, of course, that we push the products we already have on stock to them. So that makes it easier for us to sell any kind of product that we have in stock becoming whichever PC we have, we can sell it slightly harder to the larger corporates and that demands a specific our configuration. And there, we have seen delays in deliveries, but I would say no significant effect on sales. But of course, if there is a delay delivery, it can affect the inventory level at a certain point in time, which was the fact which was the case in the end of the quarter. Yes. And have you seen that accelerated in December? Can you comment anything on that or beginning of January? We have seen no acceleration of that. It's a continuous complicated situation, let's say, of our global supply chains at the moment, and we are trying to manage within that space. Okay. Excellent. I'll step back. Yes. Thanks. And the next question comes from the line of Michael Lissing from Carnegie. Please go ahead. Yes. Hi, good morning. I have a question about the project related services. If you can elaborate a bit on development in Q1 and our differences between countries and overall utilization and what you can sort of take out more from the organization our I think overall, you can say that this, of course, has been a bit off and on during the fall, depending on how countries have behaved, whether it's going through harder lockdowns or not. But and that has, of course, still have been challenging to come into offices to do installations and so forth. However, we see also that, that is sort of I mean, offices will change going forward now. So that might change going forward, but we'll see. But it has been during the fall, Europe. It has been challenging on that side. And that, of course, creates a lower utilization when we have the people that are sort of ready to do that but cannot come out today to the different kinds and do the work. So yes. But you saw an improvement quarter on quarter compared with the summer? Yes. Yes, yes, yes. We did that. We did that. And that's also back to the fact that, that was also what we also talked about in our Q4 report that we then we saw some light on the activity or the increased activity among our customers, especially done on SMB side. And that, of course, is an improvement from Q4 in Q1 where more companies are adjusting to the new environment and then also see the need of increasing or implementing new solutions in their offices, which, of course, is benefits us. So we are very much on our toes here, but we can we have more capacity than we needed in Q1. But still, there's an improvement quarter on quarter. Thanks. And the next question comes from the line of Frederik Stenkiel from Nordea. Please go ahead. Good morning. Congrats on a good report. Thank you. I was wondering if you could talk a bit about our acquisitions, kind of your outlook on that? I guess debt levels have started to come down quite well for you. And If you could talk a bit about kind of the pipeline or the shortlist you have and how the discussions are going. I guess you're looking for service our oriented companies and if they're willing to sell at a time like this when it might not be peak earnings year for them, if you see what I mean? Sure, sure. I mean, the as you know, our we have quite a clear acquisition strategy, And it's a quite a clear part of our overall strategy to do acquisitions. And we and I should say the pipeline of possible acquisitions us is good. And we are evaluating constantly several different targets. And as we also mentioned before, I mean, what we can see now is that given the given how our portfolio have developed now, we can be much more targeted in our sort of acquisition hunt going towards much fill out where we have white spots in our storage portfolio. And I should say the market is good. I mean, we haven't seen that much changes in pricing or in multiples. There are still everything else we have as all our markets have been between 6% and 9%. So and that continues. I would say the pipeline is among the strongest we've seen in the last 5 years actually coming after summer. So it is a good environment for that. But of course, we are we look thoroughly to what kind of targets we should look at. Okay. That's a good market. Yes, good. And the next question comes from the line of Christoper Bjornsson from DNB. Please go ahead. Good morning and thanks for taking my question. So I was just wondering, I guess, you don't want to give any guidance for the current year. Could you just give any further comments on What kind of environment you're seeing in the current quarter where you have visibility over the rest of the year? Is kind of the momentum we're seeing in terms of organic growth in Q1 Something you expect to be sustained during the year based on what you're seeing now? Or is it still a bit of a black box in terms of the trend you're seeing? And I mean, we, of course, monitor everything, as you know, very closely every day And without giving any forecast to it, I mean, as also building on what Johan said, we see some difficulties in the supply chains and that we'll monitor carefully and work hard with. There is a strong demand in the market has been in Q1, And we see now how things come along now when January starts up as well. But overall, I thinking, I mean, long term, our position as I was mentioned before, long term, our position is getting stronger and stronger in this new environment Europe, where everything goes more online, everything goes more for security, mobility, the demand for sustainability and so forth, as we have mentioned before. So that, of course, is encouraging for us to have that and to further build that and strengthen our position. Great. Yes, overall? No, overall I mean, overall, the changes. It is I mean, for everyone, it's, of course, a bit hard to see what the future might hold, depending on how the lock down how that changes. But I mean, if we look from the society as a whole, there will be more and more people get vaccinated, more and more people can come sort of back to a normal position. But that's how long time that will take, we'll well, we'll see. Yes, sure. Just a quick follow-up. Are you seeing any kind of changes in this market dynamics in terms of, for instance, in the public sector where our Some of the big entities are kind of splitting up previous contracts in more kind of narrow contracts where they're separating software and hardware or infrastructure and clients and also inviting Square and hardware or infrastructure and clients and also inviting a higher number of vendors per claim agreement so that they're kind of Driving the public sector customers are driving higher competition and that is hurting margins or your ability to win? Or Hasn't there been any changes there over the last months or No, no specific changes. I mean the public sector just goes on right now, which is, of course, very good. And that's also back to the mix we have with SME, dark corporates and public. And the public side is good to have as a base. But there hasn't been any changes, broadly contrary. All right. Thanks a lot for taking my questions. Sure, sure. Thank you. And we have a follow-up question from the line of Ramu Koria from our Tibi, please go ahead. Thank you. A question on networking cap. A few quarters where you were talking about having temporary improved terms with your suppliers. And now it seems like story somewhat different. Is the current should we read your comments today as this level of payables versus sales or what have you as a or the sustainable level? Herb? I think how you should read them. 1st of all, temporary, we've always explained by the fact that we don't have longer than 3 month contractual agreements on the payment terms. That's why we call them temporary. That doesn't mean they will fall due or change within 3 months. So it can continue for longer. At the moment, given the situation, we have prioritized in the mix of, let's say, customer terms, T's and C's that we have our distributors. We have prioritized payment terms with all of them at the moment. That's why we are on such a high level. I think over time, that will change slightly. So we might keep some of these longer payment terms to some of the distributors, but not to all of them. So we will come back to more normal numbers. And again, that normal number might be the label of where we were last year compared to where we were this year. So it depends a little bit on our own priorities when it comes to the Ts and Cs we would like accept with our suppliers. And just a follow-up. I mean, could you come you going back Evaluating on other factors than payment terms lead to high gross margins. So is such an impact to negligible in the grand scheme of things? I think limited actually. I think it comes more to reducing other kinds of risk. Let's say, returns of products that we have bought, for example, would be one that we could go back to a higher a number. So that would take away more of the risk in the inventory rather than maybe pure margin effects. That's okay. Thank you. And the last question is from Daniel Trojan from ABG. Please go ahead. Herb. Yes. Hi. Final one for me, please. On private label, you said that, that was pretty strong in the quarter. What products specifically are performing the best? Oerth. And does it have any positive pandemic effects, for example, products related to work from home? Could you also give an update on what's the share up to date sales versus your targeted level in the financial targets? So what's the progression on that? Yes. I mean, Perrigel has been a a strong quarter. And what we sell, I mean, displays has gone very well, everything from home office. Since this is fairly basic hardware and sort of low complex products. I should say, displays, keyboards, mouse, cables, of course, as always, they are very good and also headsets. And now we're also moving to webcams, and we have managed to have quite a good actually production on webcams, given the fact also that Logitech and other suppliers has been out of stock. So that has been very good for us. So we are moving towards the different kinds of new product categories like webcams, for example, and also developing that. So I should say, it's quite broad on private label, but in all segments. But everything you can think of that you need for your home office, we cannot provide, and we have special packages for that on private label also. Our so I would say that we have done a very good job on that. And I think in terms of financial targets, remember, we set the target to add SEK 40,000,000 of profit in the 1st 3 years. We added 45 actually on the first and then we set out the new targets for the next 3 years, which was another 45 added, which could accumulate and become SEK 90,000,000. And we are now in the 1st year of that journey between SEK 45,000,000 and SEK 90,000,000, and we're doing really good progress. Airtel? I mean compared to 3 years ago, we are doing less exchange of sales, let's say. So we are, let's say, selling less, Erkut, but with a much better margin improvement than we thought from the beginning. It comes a little bit from the categories that we are selling. So displays and cables, primarily cables where the margins are improvements are better, our so compared to sales as such. So we're doing very good on profit when it comes to private label, slightly less. We're a bit behind the absolute number of exchanged sales from branded products to private label products, but that doesn't change the total adoption sales because we're just exchanging sales, yes, just getting more. Yes. Our I see, I see. So what's the rough fraction of sales coming from private label today In SMB versus LTP, for example, just to get a feeling where you are? That I think it's still at the level of between depending on the category that we have launched in, the we are somewhere between our On some, very broad now again. In some categories, displays, for example, we might be on the level of 10% to 20% of sales be in private label. Cables, we are much higher and others, we are on the lower side of 10% of sales. So it differs very much between the categories. Excellent. Yes, excellent. Thanks a lot. Thank you. And we have just one more follow-up question from Ramiro Colia from SEB. Please go ahead. Erb. Sorry, guys. Final one for me. Sure. Go ahead. Thank you. On the OpEx side, Herb. Just calculating a bit backwards, it seems like underlying cost inflation is in the ballpark, 3% to 4%, squaring in the savings you've been able to our In the last few quarters here. Is that sort of how we should reason about the levels going forward, a 3% to 4% increases? Or is there anything else to reap in terms of savings? Could this business center closure, for instance, lead to any savings in the coming quarters? I think you should see the business center close more as a change our of marketing mix. So we would probably continue with the same level of investments in the market mix, say moving towards, as Thomas was saying, more towards maybe brand marketing. We are constantly, of course, increasing the paid search investment. So it's I wouldn't look at that as a possibility of cost saving. I think your number is more or less in the range where we expect costs to develop. That will be different slightly different in different quarters due to the fact that the variable pay and provisions are, of course, varying depending on how well we perform this year compared to last year. So that could vary a little bit between the quarters. But if you take a slightly longer period, I think your number is good. Yes. Great. That's very clear. Thank you. Thank you. And as there are no further questions, I will hand it back to the speakers for closing remarks. Very good. Thank you very much. And thank you all for listening in to our Q1 call. Thanks for your question. And just please follow-up with anything else, just e mail or call us and we're ready for you. Thank you very much for that and have a great continued day and talk to you soon.