Welcome to the Nelly Group Webcast with Teleconference Q1 2022. For the first part of this call, all participants will be on a listen-only mode, and afterwards there will be a question and answer session. Today, I am pleased to present Kristina Lukes, CEO. Please begin with your meeting.
Well, thank you, and warm welcome to the Q1 2022 report for Nelly Group. My name is Kristina Lukes, and as usual, I host this call together with John Afzelius, CFO for the group. Let me start off by setting the scene, where are we heading and who we are, before we will talk you through the quarterly results with a final Q&A session. Where are we heading? Our vision is to develop Nelly into the go-to Nordic community for the young fashionista, leveraging on the core strengths of the company and the brand, the inspirational top-of-mind community for our key Nordic target group. Current focus is on setting the foundation, build a profitable core to enable our future profitable growth journey.
Our strategic bets are on improving our customer experience, building frequency on our large and engaged customer base, and last but not least, with the high volumes and large gross numbers, we believe in continued efficiency gains in our offering and throughout our operations. Nelly is an integral part of the young woman's everyday life. We were founded in 2004 in Borås, built through influencer marketing, and the go-to destination for 1.2 million customers. Our core customer is the young fashionista who looks for inspiration and solutions to look and feel fab every day. Speaking of core assets, our relationship with our core target group, 2.1 million members on Nelly.com and 1.3 million followers on social media. Moving on to slide four. Who is our core target group? Denise is represented by, or she's represented by Denise.
She shops 18 times per year for her appearance. Currently, twice per year at Nelly, sort of signaling why retention and increasing frequency of our core customer is at the heart of our strategy. To the focus of today, the first quarter of 2022, and we summarize it. We started off the quarter fairly slow, saw a strong uplift in February, and a setback in March. Low traffic and high competition resulting in a disappointing decrease of sales with 4% in our core Nordic business for the quarter. We are happy to see the effects from our warehouse investment with lower fulfillment costs overall and as share of turnover. We are investing in marketing in the quarter to strengthen the relationship with our customer and, in the future, of course, decrease dependency on paid traffic.
Our investments show first positive indications, especially in influencer marketing, with a focus on TikTok and new ways of working in social media. If you move to the next slide, some highlights on the core of Nelly, which is all about, you know, for the rainy Tuesday, for the Friday after work, for the graduation celebration, for every day. Even though we can't state that we're out of the pandemic, restrictions are gone and society allows for celebration, party, and nightlife. We are happy to see that despite two years with a lot of restrictions on party and celebration, we are considered the number one party destination and growing in our target group, according to Nepa, and visits to party wear on site increased by 25% year-on-year.
Even if party is on again, the effect is not fully seen in our sales since we suffer from delays and late arrivals on party and occasional wear. Some words on marketing. Our investment in marketing in the quarter has generated positive tendencies. New ways of working with performance marketing and increased variety in paid social has improved performance, or has improved performance cost of sales, I say, despite inflation in the market. I'm also happy to conclude a 9% increase in direct traffic in the quarter. Our target group lives in a physical and digital world simultaneously, and 90% of our target group use social media every day, a total of three hours, and out of those, 100 minutes are spent on TikTok.
We built on our innovative thinking this year, influencer marketing through new takes focusing on TikTok and hosted a Nelly House that generated 70 million views on content from our studio. I'd also like to highlight that our work with our own app that we have, for example, activated in new ways on site, has increased direct traffic by close to 60% year-on-year. Also good news to share that our app was ranked top shopping app during the quarter in Norway.
Handing over to you, John, that can take us through some more details on the financials in the quarter.
Thank you very much, Kristina. Please let me go through the P&L and the financials for the first quarter. Net revenue fell by 8% in the first quarter. Underlying sales before returns in Nelly's core, i.e., the Nordic D2C, direct to consumer market, grew 2% in the quarter. This was driven by a higher average order value mainly. The start of the quarter was characterized by lower demand. However, after the COVID-19 related restrictions were lifted, sales grew rather markedly. The end of the quarter was weaker with a more cautious consumer behavior, possibly affected by the war in Ukraine. The lower net revenue has two main components. Firstly, the return rate bounced back from historically low 30% that we recorded in the first quarter last year.
The higher return rate was partly mix driven, but primarily a result of a more normalized return behavior as the pandemic impacted return behavior in other ways than only category mix changes. The 35% return rate recorded in this quarter is, however, still two to three percentage points below the levels we saw in Q1, for instance, Q1 in 2019 and 2020. The markedly lower return rate compared to the pre-pandemic levels is explained both by the sales mix but also active measures such as excluding customers with an unsustainable return behavior, something that we have continued to do throughout the year. Secondly, net sales fell due to lower B2B sales. This was, as deliveries to Zalando fell in Q1 2020 compared to last year.
Nelly's own brand has since 2019 been available to European customers on Zalando, and this wholesale business has since been small, but a sensible add-on to Nelly's core Nordic D2C business, and it's a way to supply European customers, after we exited the continental markets in early 2020. While demand for our own brand on Zalando has been growing, Zalando is transitioning towards really a marketplace model, and we have so far decided not to accept the offer to transition to that model. Additional B2B customers are expected to at least partly offset the lower Zalando volumes going forward.
If I move on to the gross margin, an important line for a company like ours, it increased to 44.3% compared to 43.7% last year. The main reason for the higher gross margin were continued low levels of older inventory, implying low inventory write-offs and outlet sales. We continue to effectively manage inventory levels by keeping the levels of old stock down. A major driver for Nelly's gross margin is the share of own brand sales. We saw 34% in Q1 2022, which is two percentage points lower than last year. Mainly, again, due to the lower volumes of B2B sales, which are exclusively own brands.
We also saw delays in deliveries of some of Nelly's own assortment, which also had a negative impact on the sales mix. The levels of own brand sales that we have seen during the last few quarters, they are lower than the 43%-45% that we've seen and generated historically, and it remains a clear target to increase the share in 2022 and also beyond. As a consequence of the lower net revenue, gross profit decreased by SEK 9 million despite the higher gross margin. I will proceed to go through the cost side of the P&L. Fulfillment and distribution costs were SEK 5 million lower than last year and decreased somewhat also if you measure it as a share of sales.
Fulfillment costs fell both in absolute and relative terms due to the new automated warehouse in Borås. The core processes of the new automation solution achieved a targeted efficiency for most of the quarter. Peripheral processes though continued to be adjusted, and the work to realize the targeted cost savings during the year is going according to plan. The other part of the fulfillment and distribution cost line item is of course distribution cost. Distribution cost grew somewhat during the quarter, driven primarily by a higher proportion of parcels than letters, but also fuel surcharges, which resulted in slightly increased outbound freight expenses despite the lower volumes that we delivered in the quarter. In summary, though, the entire line item was SEK 5 million lower. Proceeding to marketing cost.
It amounted to SEK 36 million in Q1 compared to SEK 32 million last year. Changes in working methods within performance marketing led to flat performance marketing cost year on year, despite higher pricing in that market. The increase in the total cost line, though, is related primarily to investments in influencer marketing and social media. For example, as Kristina just mentioned, the TikTok event, Nelly House, which was held in the quarter. The last cost line is admin and other operating costs. It amounted to SEK 66 million, a slight increase, compared to last year. We had two main effects. We saw higher lease related IFRS 16 amortizations during the quarter, compared to last year, since the new automated warehouse entered service formally in October 2021.
This was, however, largely offset by lower expenses for group functions as these were basically the administration of Nelly, the Nelly Group company, as these functions were fully integrated in the Borås-based administration during 2021, and we'll see the full effect of that from in August 2021. In all, EBIT in the quarter was SEK 9 million lower than last year, and the fall in operating profit was primarily the result of a reduction in sales, which was behind the fall in gross profit as the operating expenses were, in total, unchanged. Please remember that the first quarter is seasonally Nelly's weakest quarter, which implies that the operating leverage is at its highest, and the lower net revenue consequently hits operating profit particularly hard in Q1.
If we continue to the next slide, please let me just shed some light on some other financial aspects of the quarter. While we, during the quarter, spent about the same amount of SEK on performance marketing as last year, the higher performance marketing pricing implied that fewer sessions to our sites were generated. The investments that I mentioned in influencer marketing and social media have a longer lead time to impact, and they have not compensated the low number of sessions generated by performance marketing in the quarter. With a flat conversion rate, this implies that the number of orders fell by 6%. On the other hand, though, the AOV increased despite low number of orders.
The gross revenue increased despite the low number of orders, and this is explained by a 7% increase in the average order value. The average order value in the quarter was primarily driven both by product mix, but also a stronger Norwegian krone and euro compared to the Swedish krona. Secondly, inventory turnover remained at attractively high levels in Q1. Inventory share of sales amounted to 17.3%, which is slightly higher than the 16.1% that we saw last year, but it's still markedly lower than the pre-Q2 2020 levels of above 20%.
The share of old stock continued to be historically low, and a low volume of older inventory or, in other words, a fresh inventory, implies a more attractive customer offering and a lower risk of loss-generating outlet sales, as demonstrated in the quarter. Finally, cash flow in the quarter was SEK -147 million and was dominated by negative working capital changes of SEK 120 million. In seasonal terms, the first quarter has lower sales than other quarters and involves building up inventory ahead of the second quarter, in which sales are seasonally strong. We closed Q4 at a strong cash position and have since built up inventory ahead of Q2. After having been through the seasonal cash low point of the first half of 2022, we expect to build up cash through the course of Q2.
To summarize, cash at the end of the quarter amounted to SEK 51 million, and we did not tap into our credit facilities as per the 31st of March. We have no interest-bearing debt apart from a remainder of the government tax credits after having done repayments during the quarter. Having rushed through two slides of financial highlights, Kristina, I'm handing back to you again.
Perfect. Thank you. Well, I'd like to finish off with a reminder of the fact that we reached our sustainability goals for 2021, and we work on our three core focus areas, empowering femininity, respect the planet, and fair and equal. I'd like to take the opportunity now to share our overall sustainability targets going forward, if you move to the next slide. In 2022, so in this year, all of our own branded products will only be made by externally inspected factories. Next year we aim to achieve a net zero in our own operations. 50% of textile products will be made out of sustainable materials in 2025, and in 2030, emissions of greenhouse gases in the value chain will have decreased by 50%. All right.
I think now is the time to open up for questions that we can answer. I'd like to just summarize by saying that we are recruiting more followers to our community and creating more direct traffic in the quarter. While we are unhappy with the lack of growth and profitability, we do believe in our future, and that's why we are intensify our work towards increased efficiency of our customer offering. With clear actions, both short and long-term, all in order to build and strengthen the go-to Nordic community for the young fashionista. Thank you.
Thank you, madam. Ladies and gentlemen, if you wish to ask a question, please press zero one on your telephone keypad. First question is from Nicklas Fhärm from SEB Equities. Please go ahead.
Thanks, operator, and good afternoon.
Good afternoon.
Kristina and John, I think the first and most important question will relate to sales development, and I obviously heard you elaborate, of course, on that. It would be great if you could put this into context. On the one hand, we have the Swedish overall apparel market being up by 11% in January, 22% in February, and 36% in March, which is a quite different picture from what you're reporting today. I would be very interested to hear your thoughts on market share development. I would be very interested to hear your thoughts on sort of your collection and your market position in the current market environment, please.
Yeah. If I can start off, and you can fill in, John, if you wish to. I think the quarter has been every month has been very different, so we started off quite slow with a much stronger February and ended up with a weaker March. We believe that a lot of the effects in February not reaching to the same growth levels as the rest of the market is of course linked to letting go of restrictions and the fact that traditional retail, physical stores grew a lot. That's one part of it.
If you look at the totality of our business, we are seeing a growth in party and occasion wear, but with very high turns on our inventory. We believe that we could have sold even more party and occasional wear with higher stock levels.
Yeah. Just building on that, I think the two main components, if you're looking at the market in total, if we back up the tape, I mean, going into the pandemic, the physical market or the physical stores, I mean, they fell like a brick, and our sales did not. Now you can see a proper bounce back in the physical trade, because the numbers you mentioned include also those.
Mm.
I mean, showing very nice growth rates. On the other hand, we are not falling as a brick when the tide is turning. Nelly, since we have no physical stores, that pattern is, of course, less relevant to us. Secondly, you have the mix on what we talked a lot about during the pandemic. Going into the pandemic, we saw a huge headwind on party wear, of course, that being our largest category going into the pandemic. At this point, I mean, even though we see double-digit growth in party wear, we should remember that we're still, I mean, more than 50% down from the levels we saw two years ago. Even though we see healthy growth there, I mean, there's still ample room to grow.
Mm.
I think it's wise currently when we see this huge shift to really differentiate between the physical market and the online market.
Right.
I'm sure you must have seen the statistics for the e-tailers is quite dramatically different than the total figures that include physical stores. Does that make sense, Niklas? It was a long, lengthy answer.
As a whole, that is. Anyway, before we-
Sorry, we lost you there. We just heard, "As a whole.
Oh, okay. Do you hear me now?
Yes.
I can hear you well now.
Okay. I was just saying that according to my data, the Swedish online market as a whole was down about 13% in Q1 as an average.
Yeah.
Exactly.
Can I ask you, looking at the quite significant working capital in this quarter, how much of the SEK 120-odd million in inventory build-up affecting working capital is actually due to, say, late deliveries because of supply chain issues, and what is actually the result of lost sales?
Well
I mean, certainly you had a different expectation than -8% going into this quarter, I'm sure.
Yes, definitely. Well, actually, we're not, as you can see from the inventory levels going, and the inventory share of sales going out of the quarter, we're actually not building old stock or stock dramatically. We're building stock, yes, but not dramatically. Looking at the, I mean, dissecting the working capital components, of course, there are. We are building inventory, but not that dramatically. There are also other. I mean, on the debt side of the working capital, we are repaying Corona credits. We also have some other debt elements that were outstanding for the 31st of December that have been repaid during the quarter.
We had a very strong cash position going out of 2021, and we're almost hitting the trough going out of the quarter. That's why I was, I mean, keen to comment that yes, it is a quarter when we are building working capital, as we always do in Q1. It was more this year due to several elements, including the ones I just mentioned. Going into Q2, we've passed the trough, and we are building cash as we increase sales in the second half. Does that answer your question?
Excellent. Thank you, John. My final question, and then perhaps I may come back into the call later on. Could you help me understand if the share of private label sales are actually down 2 percentage points, which is quite a bit and a bit unexpected, I have to admit. Why did return rates increase by almost 5 full percentage points year-on-year? Could you just walk us through the dynamics here, please?
Yeah. I think one part of private label share going down is the fact that we're decreasing our partnership with or the sales to Zalando, which is 100% our own brand. That business is also no returns since we're selling. That's one element. The second element is. I think we mentioned that going into the pandemic as well, that the overall consumer behavior around returns was affected during the pandemic because people just didn't go back and hand in returns again. Remember that we are on a lower level than pre-pandemic levels, I think 2 percentage points or so in relation to 2020 and three percentage points or three percent in relation to 2019.
Those are the three main factors. I don't know if you want to add.
I can just decouple them and put some numbers on it. The 2 percentage points lower share of own brand sales, if you decouple that, more than half of that decrease in share comes from lower deliveries to Zalando. The other half, or less than half, less than 1 percentage point, comes from underlying lower own brand share. That in turn is fully related to late deliveries of the own brands. That's the share of own brands bridge, if you may, from Q1 last year to this year. The question, why do return rates pop up so 5 percentage points? It's a very relevant question.
Firstly, if you look at how large is the mix compared to that, and it's actually less than 2%. I'd say on the order of magnitude of 3% is due to the fact that Q1 2021 was really an outlier when it comes to return rates, if you look at our numbers historically. We can explain a share of that by mix changes, but most of it must be related to changes in behavior in the way people return. Basically, people being afraid to go to the post office to return their.
Yeah
... their parcels. We saw that in April 2020 clearly, and we also saw it again around November, December, January, February, a bit more than a year ago.
Right. Yeah.
Lengthy answer again, but I just trying to be clear on that.
It's very appreciated. Just before leaving then the floor for this time, I mean, the market is where it is, the comps are what they are. This is what you have reported now for Q1.
Yes.
Should we expect? Because I guess, you know, your business to business platform will continue to decrease throughout the year.
Well-
Do you think this is a likely sort of ratio between private label share of sales and return rates also going forward, i.e., for the rest of the year? Or do you expect that to change for any reason?
Well, firstly on the B2B side, we've seen this, I mean, we peaked our B2B sales in Q3 2021, and we've now seen two consecutive quarters of lower B2B volumes. As I mentioned briefly, we're working rather intensively to broaden that customer base. So we are expecting to at least partially mitigate that decrease from Zalando with new customers. That's the first question on the B2B side. Then, sorry, I didn't listen properly. I lost your second question.
The share of private label.
The share of private label sales.
Yeah.
Yes. The return rates as well. If I'm starting with the return rate, should we see +5 percentage points also going forward year-on-year? No, we don't expect that. 2021 Q1 was an outlier. We don't expect to see those kinds of dramatic year-on-year increases going forward. I mean, I expect more mix-driven, normal-ish year-on-year. If we increase in high-return regular customers, we should see an increase, but nothing like the 5.0 percentage point increase that we saw this quarter.
I mean, the core of our strategy is our own direct to consumer sales on our own site. We've also been very clear that share of own brand sales we want that to increase. That's of course an ambition we have to improve that or increase that quarter by quarter.
Finally.
Yeah
As I mentioned, just briefly there is an effect of the delays.
Yes
the share of the own brands.
Oh, yeah.
All else equal, if we manage to sell those in Q2, that should all else equal increase the share of own brands in Q2.
All right. Thank you so much for all these answers. As I said, maybe there's an opportunity to come back into the call later on. Thanks.
Absolutely.
Happy to.
Thank you, sir. Next question is from Madam Ebba Bjorklid from DNB. Please go ahead.
Hi. Thank you very much. Ebba Bjorklid from DNB. My first question is, I would like to hear about what you've seen in terms of changes in the consumer sentiment. Especially going into Q2 and during April, what have you seen so far? Is it a similar trend to what you saw in March, or is it looking a bit more positive?
Well, we can't really comment on Q2. However, if we look at the first quarter, the market as such, there are quick turns. Just looking at the first quarter, it, you know, opening up and strong effects from a new demand for party and occasion wear and other types of categories in February, and then a shift again in consumer behavior in March. Without commenting on the performance in Q2, what is clear is the need for us to make sure that we can act as quickly as possible, and I'm happy that we've built in, you know, more flexibility in our supply chain with the suppliers that we have.
Even though we've you know, suffered from delays, we've been able to maneuver okay on key categories despite the turmoil in the world around us. I think if I comment on consumer behavior, our target group was, you know, highly affected during the pandemic because a lot of young fashionistas didn't have their extra job in a bar or in a restaurant, and they basically had, you know, their the cash that they could get from a student loan or a CSN. Now there are opportunities to actually make extra money.
There is an inflation in the market, but there is also a need to reboot and refill your closet, and because of the need to go out and spend, you know, go clubbing and partying and be out there again.
Perfect. Thank you so much for that answer. It would be interesting to hear, and I'm aware that you can't comment too much on Q2. Just thinking about how are you thinking in terms of deliveries going forward and potential delays, et cetera. You were talking about these increased flexibilities that you've built into the supply chain.
Yes.
When we're thinking about the months or even quarters ahead, are you able to give some indication of what you predict given where we stand right now?
I think that the market. I personally think that we will have hiccups in the market for a longer period, you know, forward because these hiccups will have, you know, they won't just pass directly. Again, I think I will reply in the same way. It's back to how we are prepared to handle a more uncertain situation with, you know, calculating with additional delivery times, and building in as much flexibility as possible, not only in delivery, but also in the commercial plans to be able to maneuver around the deliveries that get to us.
I think we've proven a couple of times that we had some major campaigns during the end of last year where we didn't get the products that we were supposed to sell. That was sort of the first tough trial, how to work around that, because I think that the future will hold more of those challenges.
Yeah. Thank you for that answer. One question I have, and this is linked a little bit more to the broader strategy for the company, but you are focusing quite a bit on increasing frequency.
Yes.
It would be interesting to hear both near term, but also a little bit more longer term, how you are thinking about driving this, and also if you can give any indication of if we increase from the 2 times out of the 18 times, where can we get?
Well, I think the key areas to focus on are, you know, focusing on the existing customer members follower base to make sure that we continue our dialogue with them with relevant offerings to, you know, hold their hand throughout their journey to conclude one more purchase. That's one area. I talked about retention when I started off this call. That is a key focus area for us. The gross numbers, when we're talking about 2.1 million members at Nelly.com and, you know, 1.2 million active customers, the gross number, it's large, it's huge. Of course, you know, the keys that we have not yet found.
There is still a job for us to do to find the right keys to increase frequency. The other areas, of course, around the concrete product offering, and we during the pandemic has broadened our offering to target three different occasions. Now when there is, you know, party nightlife is back, then of course, for us to continue develop and stay relevant in all different categories that are relevant for the three different occasions.
Perfect. Thank you very much for those answers, and I will revert back in case there are any additional time left on the call.
Thank you, Ebba.
We have questions. We have another question from Nicklas Fhärm from SEB. Sir, please go ahead.
Okay, I missed part of it, but it's this is Nicklas again. Was it my turn?
Yes.
Yes. All right. My follow-up question would be if you could, because I just revisited my notes from your Q4 conference call, and we discussed the marketing strategy.
Yes.
My question is pretty much the same today. What should we expect you to do in terms of marketing to sales? Because at some stage, you clearly want to do sort of changes to your strategy, which hopefully will in the end create a better ROI.
Yes.
We also discussed whether we should expect an overall increase, actually, at least as a percentage of each krona in sales, for this year. What's your comment to that exact same question today?
So, uh-
Given sales development, et cetera.
Well, I mean, strategy remains. We need to build a stronger dependency on direct and organic traffic to decrease the dependency on performance marketing. If I start off with the tactics and the strategy around performance marketing, we have this, you know, we've managed to stay flat or actually decreased the performance cost of sales in the quarter through new ways of working. And some of the investments that we've done in the channels that we believe in, especially influencer marketing, but also a much higher variation and specifically targeting different categories in paid social, we see a higher share of direct traffic. I think an increase of 9% or so in the quarter. We believe in the activities and the focuses we have.
Now it's about making sure that we put more fuel where we see a positive effect, and continue to innovate and develop our channels together with our customers.
Can I just add on that, Nicklas, just briefly, and tying back to the Q4 comments and the developments. If we back up the tape two quarters to Q3 and firstly focus on performance marketing, we clearly had a very disappointing performance marketing figure in Q3. We said in Q4 that we saw during the quarter improvements in how we handle performance marketing, and we have now seen a full quarter of that. That's why we were pleased to see a flat cost in a market where we see significant price inflation, even though, and this is important then, that the gross revenue increases somewhat, because. On the performance marketing side, we're happy with the development of how we've handled that.
We dislike, of course, the inflation, but it's difficult for us to do something about that. That's the first component. I would say that that component of the marketing cost, which is the largest one, is in check, and we're handling that well now and increasingly well. The second part is then, of course, other types of marketing than performance marketing. In this quarter, we saw increases in influencer marketing and in social media, areas where we do want to reinforce. We at least attempted to be clear that we didn't expect the marketing share of sales to go down because we wanted to invest in these areas, which we've done. Your implicit question in what should we expect going forward? Well, again, performance marketing in check.
No underlying increase in performance marketing spend to sales. On the other hand, some of that some increase year-on-year based on that we're making small investment in our select investments in influencer marketing and social media.
Yes.
Right. In short, some reinvestments, right?
Exactly.
Yeah. Okay. Also finally, on the fulfillment and distribution side.
Yes
I think you write somewhere in the report that you've managed to take out about SEK 5 million in costs relating to your savings program from automating the DC. Is that correct?
Well, we decreased that cost line by SEK 5 million year-over-year. That is correct.
Oh, okay. That's what it says.
Yes.
There's a lot of reports today. I guess my question is, since I was actually looking for a slightly lower number than the SEK 49 million odd, fulfillment and distribution costs, do you think you're on par with your internal expectations in terms of delivering-
Yes
... the savings that you're targeting?
Yes.
Yeah.
Uh, as I-
Okay.
There are two components to that line. The largest one is the distribution cost. On the distribution cost, it increased slightly. Of course, when we deliver lower volumes, you'd like to see distribution costs go down somewhat.
Mm.
The reason it didn't is because we saw fuel surcharges, and that we saw a different mix in that we sent more packages than letters, if we're technical. That was, I mean, so a small inflation on that side. That means we saw a rather healthy decrease of cost on the fulfillment side, even though it's only Q1. Because please remember that when automating, what we're doing is that we're reducing staffing quite dramatically. Fixed cost goes up a bit, but then the variable cost, mainly through staffing, goes down.
We are increasingly confident that we will reach our business case for the warehouse project during the year, and we should see more effect of that in the larger volumes quarters like Q2 and Q4, to be explicit. The short answer is.
I think it makes perfect sense. Yep. All right. That's it for me. Thank you so much for taking all these questions, as always.
Thank you.
Thank you.
We have no other questions. Back to you for the conclusion.
All right. Again, thank you for listening in. Even though you didn't ask all your questions now, both John and I are here for any reflections or thoughts that you should have, or that you can have after this call. Thank you so much.
Thank you.
Ladies and gentlemen.