Earnings Call: Q1 2019

May 17, 2019

Morning, ladies and gentlemen, and thank you for standing by. Welcome to the Interim Report January, March 2019 Conference Call. I must advise you that this conference being recorded today on Friday 17th May, 2019. I'd now like to turn the conference over to your presenter today, Thomas Hites. Please go ahead, sir. Thank you very much, and welcome everyone to this Q1 twenty nineteen conference call with Cinch. My name is Thomas Heath. I'm Chief Strategy Officer and Head of Investor Relations. With me in the room today, I have our CEO, Scalvaner and our CFO, Roshan Sabanas. So welcome, everyone. And with that, I'll hand the word over to Oscar. All right. This is Oscar Warner, and welcome to this quarter's Q1 presentation. So without further ado, let's let's start. What we do, many of you have heard this before, but I just have, you know, one slide at this, so we position ourselves. So we deliver customer engagement for enterprises to consumers via mobile technology. And we have a cloud communication platform to do this via messaging, via voice, and via video. What fascinates me about this market is that it has a 100% consumer penetration, I've yet to find one single adult person that has not used this type of services. And so I think we will have received an appointment from our dentist or a reminder from an airline or getting the ticket from somewhere or we have called Uber or we have called our doctor via video message. So that's fashionates me that it has so high degree of penetration. And I think that's the same in any country that I go to across the globe. This means that this is a growing and it's a global and it's a multibillion dollar market. So we are truly in a market where you can out to any country that our customers and a very large amount of enterprises can be customers and it's a growing large market. One thing that sticks out about Cinch, but not the only thing, but it's we serve the 8 out of the 10 of the largest U. S. Companies. Around about 5 of those are live with significant traffic and we're working on the others. But we have given that we have a highly scalable platform, we have managed to win and keep some of the or the largest customers on the planet here, and that's probably where we stand out the most. We also deliver software for mobile operators based on the same underlying platforms. We have a very deep technical competence all the way the enterprise down to the operator network. Right. Next slide, please. Growth markets, just to make this point again, we have showed this slide before, but messaging, which is our core market, as you see, And as you're seeing, we have changed the report a little bit. We talk about messaging. We talk about voice and video and we talk about the operator segments. On this slide to shorten it a little bit. We only talk about messaging and CPaaS. And but the messaging market is a large market you can pick a number of different reports. We used to think that mobile squared has a good estimate of this market. They this market to use $17,000,000,000 rungout. But you can find estimates from $15,000,000,000 to $50,000,000,000. And the reason for the size is, is, firstly, text messaging has been extremely effective, in the world in a very cost effective manner and has a very high open rate. And now the growth is very much driven by the new messaging formats, making it making it possible to send more advanced forms of messaging to your consumers. On the CPaaS side, this can be interpreted as the to a layer on top of the termination fees on top of the message you sent. That part of the market is growing very fast. You can market estimates range between 35% and run about 60% CAGR. So that part of the market is growing very fast and this is basically all the software value add that it can add on top of just just sending a message for an enterprise. So all in all, global market, large market and a growth market, in many segments and certain segments go faster than others. All right. Next slide, please. Then looking at the quarter results, in Q1 2019, so we had a strong gross profit growth of of 45% getting up to $289,500,000. As you know, we focus primarily on gross profit that's what we think is our value add. We had adjusted EBITDA rising to SEK 112,000,000, which is one of 73% growth since last on a yearly basis. And we have an adjusted EBIT if we exclude acquisition related amortization of SEK 102,000,000 and profit after tax of SEK 57,800,000. We have rising gross profit and EBITDA in all business units. And we have organic growth, both from both organic and from acquired businesses. And We also say that we are continuing our investments to capture new market growth opportunities in the new markets. We see a a technology shift in the market, that we see the market going from kinematic being 360 characters text messages to almost being able to send an app like experience to your inbox? That obviously drives that obviously drives a market growth opportunity. You can imagine being at an airport, instead of just getting a reminder for your flight is delayed, you get a message which behaves like an app stating your flight is delayed these are your 3 options for rebooking, press this button and you can rebook. And by the way, here's the voucher. So you can get a free meal. That's a better experience for you. And I'd say it cost saver for the airline. That obviously becomes much better service, but it also takes a bit more software and a different go to model in order to approach the customers with that type of service. So therefore, we are investing in position ourselves the growth opportunities that we see are coming. So if we then look at our 3 segments that you see, we have organized a report around, We have the messaging segments. We have the voice and video segments, and we have the operator segments. If we start with messaging, we see rising message volumes, and this is driven by a couple of different factors, partly it is U. S. Big Big Tech Companies is fueling a strong growth in this area. We managed to be a partner to the biggest companies in the world. And therefore, we do see strong growth driven by those companies. We also see a very high demand for our personalized video services. So that is basically sending video messages directly to inbox personalized to your own preference. This is driven by the acquisition with David Vehicle and it's a strong growth for that. We also see positive currency effects in this quarter, which is giving us a tailwind here, which is affecting growth in a positive way. And again, we are, we are investing in the next generation, next generation messaging and next generation on the volume side. Actions on the churn rates. And we're growing both with existing customers with new customers and new use cases. And we are seeing a 13% organic growth in number of transactions in local currencies and a 15% in in organic growth in local currencies and gross profits. So we're seeing those following each other. And in a good way, and we're happy with that growth. Gross profit per transaction is something that is very important for us and sort of looking at at all times, looking at how much, how much value add do we make per transaction. So here we are, here we're trading both the gross profit per transaction and the OpEx per transaction. And what you can see on this slide is that the the gross profit per transaction depends on the mix of the terminating market. Where are we terminating? It also depends on how much value add are we adding per transaction. So in the personalized video case, we're adding a lot more value add and a lot more software on top. And that's something that so that gives us a higher gross margin per trans or gross profit per transaction. And that's something we're consistently working on and across our business units to add more value on in software on top of the message transmission. And we're also seeing here a currency tailwind, which is increasing transaction. And you can see this in this graph also see that we're doing investments for the future on the OpEx side. But that's following the gross profit increase relatively nicely in the slide. Okay, next slide. We have the messaging and messaging EBITDA per gross profit. It's a very key metric for us. We see that every for every gross profit, a dollar or crown that we generate, we generate a EBITDA of roughly 45%. And that's been stable. So we're following this graph and we want to be a highly profitable company and generate a lot of cash flow that's core to our strategy. And therefore, we manage this graph carefully. In this quarter, as you've seen, the gross profit rise, and we also see and investments rights in order to position ourselves for the future. And therefore, we have managed to keep this graph stable. All right. Next slide. As we have reported in previous quarters, we have a strong momentum on the voice and video side, and that has come continued during this quarter. We had a really good Q4 and the Q1 is on the gross profit and revenue side even better. Growth fueled by the number masking service that we do for ride hailing and also the verification services that we do. Here, we're working with key operators to offer our service in more markets and in the markets where we see demand. As you can imagine, in this type of hyper growth situation. It is a lot of work to scale the systems, have the systems in order and keep up the good quality for customers, etcetera. So it's a lot of hard work in this area. That we're doing in order to keep this type of growth, but we're very, very happy to see that the turn to profit has continued, on the voice and video side that we saw in Q4 and that's continuing out in Q1. And obviously, again, then focusing on stabilizing and stabilizing and setting this business up for on a higher level. All right. Excellent. I'm also very happy to see the improved conversion to orders in the operator, in the operator business. So we had a couple of quarters with weaker quarters in the operators and now we're seeing that we have a stronger pipeline and also a stronger conversion of a pipeline or sales orders in the operator business. So super happy to see that, and you can see it in the results in Q1. And this, as you know, it's a business that does fluctuate depending on where those projects, when and when that project actually come in and when do we when can we report them as profits. But it's strong, but it is a strong stand, strong trend in the pipe. We also see the partnership with Ericsson. You see that generating a lot of sales to us, which is very positive. As you noted during the quarter, we also announced that we will target operators with an RCS as a service offering. And that is basically enabling operators to offer RCS services to enterprises, and we're doing that from the operator business. And then as on the in the enterprise business, we are were then enabling the enterprises. And there's no impact of that initiative in this results on the revenue side, that's a future investment, but we see a strong pipe and a strong demand for operators on that side as well. So all in all, we have the U. S. Victor driving growth, we have personalized video driving growth, we have voice and video driving growth, and we have operator driving growth and we also have a currency tailwind in this quarter. If you take that all together, we have a very strong, very strong quarter, and we're super happy with that. And that's how it becomes. When all the major areas we focus on go in the right direction, you have, you have, that's had a strong quarters. And we 2 of those now, which we're very proud over, and we're very happy to see those results. That said, I'm going to leave over to Rochean to go a little bit deeper into the financials. So, Russian, please. Thank you, Oscar. Good morning, and hello to all of you on the call. It's a pleasure to present Synch's financial results for the first quarter 2019, very strong set of results, that we can talk about today. On Slide 12 called continued high gross profit growth. You find the bridge explaining our gross profit development, a significant part of our revenues are passed on as cost of goods to mobile operators. We pay them to send our messages in place our customers' messages in place calls, but the rates they charge vary greatly between markets. Since pass through revenues do not contribute to our profits, we focus almost exclusively on gross profit when we assess and steer our business. Changes in our gross margin often reflect changes in geographical mix, rather than underlying performance of competitiveness. Organic growth and currency effect are hence calculated against an adjusted comparison period in this off, where we are adding, the acquired businesses on wire and vehicle from the first quarter 2018 to our reported q11 2018 gross profit. Growth in the acquired businesses and wire and vehicle included in the messaging segment. Consolidated gross profit rose by 45 percent during the quarter to, $289,500,000, accounting from the adjusted base in Q1 twenty eighteen, which was 225,000,000. Gross profit grew by 28%. Positive exchange rate movements explain, 7% of this increase. Organic growth in gross profit in local currency and comparable units was 21%. This change is explained by changes in traffic mix and growth in products with higher gross margin as Oscar explained such as personalized video messaging. Moving on. Slide 13, where we summarize the effects of IFRS 16, the new accounting standard for leases, which we have implemented from the 1st January, on our financial results. We have applied a simplified retrospective, modified retrospective approach to the transition, meaning that the comparative year has not been restated, with the interruption of IFRS 16 lease costs of 6 $600,000 are now excluded from EBITDA in Q1 2019. These lease costs show up further down in our income statement as amortization. The group's right of use assets are recognized at cost and are reported both on the current liabilities and current assets parts of the statement. Here you see, I mean, Also, net debt increases by $83,800,000 due to this reclassification of IFRS 16. Moving on to the next slide. Slide 14, for the condensed income statement. Consolidated net sales grew by 28 percent in the quarter to, SEK 1,100,000,000. The growth rate in the quarter was positively affected by the depreciation of Swedish kroner, primarily against euro, pound and dollar. Positive currency effect on consolidated net sales was 6%. Besides the currency effects on revenue and COGS, we also have currency effects in our OpEx as a significant portion of our OpEx is related to employees and contractors outside Sweden. Finally, we also have realized and unrealized currency effects on our current assets and current liabilities that affect our income statement. When looking at the individual segments, we saw particularly strong performance in operator segment. We are now seeing successful conversion of orders to revenue. But bear in mind that revenues and earnings in the operator segment can vary considerably between quarters. Reported EBIT was SEK 69,000,000, in the quarter versus 20,000,000 last year. We have a new definition of adjusted EBIT from this quarter and going forward. Previously adjusted EBIT excluded only items affecting, compatibility, primarily related to one off items from M and A transactions. From this quarter, adjusted EBIT excludes both items affecting comparability as defined previously, and amortization of acquisition related intangible assets since these do not affect cash flow. Adjusted EBIT amounted to SEK 102,000,000 compared to EUR 59,000,000 previous year. Acquisition related amortization, which does not affect cash flow reduced EBIT $33,000,000. The amortization relates mainly to planned amortization of acquired brand, customer and operator relationships as well as software. Please turn to Slide 15 for the cash flow statement. Cash flow from operating activities was $38,000,000. Cash flow in relation to operating profit fluctuates from quarter to quarter because many of our customers maximize their liquidity by postponing payments to suppliers. The actual customer losses remain low and cash flow in relation to operating profit is slightly improving over time. Net debt amounted to take 484,000,000, down from 547,000,000 a year ago. The implementation of IFRS 16 on 1st January 2019 increased the company's net debt by 83,000,000. Net debt to EBITDA was 1.2, down from 1.9 a year ago, with the previous accounting principles before IFRS 16 the ratio would have been 1.0. Finally, on the financial targets, just summarizing our our financial targets, the financial targets of the company are unchanged from what we have previously stated, where we aim to grow adjusted EBITDA per share by 20% per year. And maintain net debt below 2.5 times adjusted EBITDA over time. Measured on a rolling 12 month basis, we grew adjusted EBITDA per share by 45% the end of first quarter 2019. Net debt to EBITDA was 1.2, down from 1.9 a year ago, with the earlier accounting principles, as I said before, the ratio would have been 1.0. With that, I would like to hand back over to Oscar to summarize today's presentation. All right. Thank you, Roshan. So to summarize, I mean, we're obviously seeing a strong quarter. We're obviously seeing the majority of our businesses doing well and when those are are impacting well at the same quarter and in the same direction. All of them, we have a strong quarter. The big ticket items are very strong line on and performance with the U. S. Based tech companies considerable interest and revenue growth in personalized video. Strong pipeline and growth in voice and video and a strong pipeline in growth on the operator business in this quarter. And we also see on the future side, we also see we're doing investments on the which media, the conversational conversational messaging. So we're seeing a shift in the market. We're seeing market growth opportunities, which are large And therefore, we think it's very, very important to position ourselves for growth. So therefore, we take, as you can see in our numbers, we take a relatively large investments in those areas. But as long as we can grow the gross profit in the way we do it today, I mean, that has a we continue to do in good profits, of course. We're generally very positive to the market growth. And we're very, very positive to the market outlook. And we sort of positive market growth, positive market outlook and the key for us now is to really position ourselves into the new formats that are coming because we think that will drive drive this market growth and our own growth in many years going forward. With that said, I will leave it over to And your first question comes from the line of Stefan APAC from Carnegie. Thank you. So the organic growth within the Messaging division was 14% in Q1. And you state now that the key driver for this growth was the U. S. Tech companies. So now excluding this group of clients, what would you roughly estimate organic growth to be in Q1 within the messaging division? Is it 10% flat or -10 percent? Thomas here, thanks for the question, Sasan. It's correct that the U. S. Big tech is an important growth driver for our group, and it also true that the U. S. Market as a whole is an important growth driver. We see significantly higher growth rates in the U. S. Than we do in other parts of the world. It's an advanced market and where we perform very well. We also built purposefully built up a strong position as one of the very few amount of global competitors you can take on really large global deals and serve these very large customers. So I'm afraid we can't go into much more details on that other than to say that that's an important source of growth, both today and we expect also in the future. There's lots of value we can bring to these companies. And that journey has only started. Okay. Another question then. We've been talking back and forth about the RCS potential. We've been talking about that for a while now, but it seems like it's always pushed forward a little bit. But now surely, of the recent launches, you must have a better view of when meaningful volumes might start to come? Or do you still see a risk of further postponement? First, it depends on how you see risk. And I believe, and I think a lot of us believe after I've been in this in the tech space for a long time, the rate or the time that it takes for a change to impact is always longer than you think. But the impact is always almost always larger than you think. So I think all of these new messaging formats are it will take time and the primary driver or the 2 drivers for it to take time, a part that is for operators to roll it out. And we can see that any in any quarter, in any year, it takes time. They roll it out and then they roll it out half. And then there is a problem with this phone and they need to do interoperability at etcetera. So it will take time for the operators, and they are, and typically take a little bit of time for road to roll out things. And the other things The other reason it will take time is for enterprises. So for enterprises to really benefit from this type of new messaging formats, it and they will need to change their processes. They will need to go into the customer journey, and they will need to, oh, it's something that I can rebook my flight via message, how do I do that? Why do I integrate that into my own system? So it will take time, and I want to be cautious again. I it will take time before we see significant portion of portions of revenue on the rich messaging performance. On the other hand, we to be sure to communicate to you now because we're taking the investments now in order to position ourselves. So And so I believe it will take time, but we're doing investments now and therefore we talk about it. Ideally, I could have waited to talk about it until the revenue came, but then you would wonder why I do the investments. So that's the balance. That's very clear. And a good bridge to my next the final questions, because you've been talking a lot about the need to reinvest the gains back into your operations. In order to plan now. For example, do you have any top 3 areas where you currently want to focus your resources? All right. I mean, we are, as you can see in our report, I mean, we have divided the business the within messaging, voice and video and operator. The by far, biggest business for us is messaging. So therefore, our number one area is various forms of rich messaging formats. RCS is 1 But we sometimes focus a little bit too much on that. We think that the OTT channel, such as WhatsApp or Facebook or WeChat, or they have a same from an enterprise perspective, they have a similar characteristic. We as a business, we don't really care what channel it goes through. They may have a different characteristic but it's like we see all of those messages. We see we're building one platform to handle all of those type of rich messages. That is the number one. Another area, which we obviously see is the personalized video, which is, by the way, a form of a rich message or a next generation message. So when you talk about next generation message, that's where we see the growth today. That's growing. That's a portion of Rx messaging. That's growing very fast. Obviously, we will invest heavily there. Then you see voice and video. We are seeing we are seeing a growth there, so we're investing there. And as you saw, we made a we made a statement in this quarter that we will target operators with an RCS as a service offering basically enabling operators to offer RCS, because we see a big demand. So that's another investment area. I think that's the main ones, but if you will pick out 1, it's the rich messaging area, including the personalized video business. Thank you. Very clear. Your next question comes from the line of Daniel Duberg from Handelsbanken. Thank you very much, and good morning to you, Humphrey. And congratulations to Strong Report. My first question would be on, we could go back to our sales again. I guess you need to connect also to operators in terms of to get their APIs with RCS that you have with SMS, I think you have 250 direct connections, etcetera. Do you see this uptake to be in progress with your own plans? Or do you see a to miss the potential future RCS rates because of fewer connections, that wasn't question. Do we see in line with plans? As I said before, it's always very hard to make exact plans in the tech industry where when things will actually hit. I'm very confident on the trend as hole that this will happen. It will drive a lot of our value to enterprises. So I'm very confident on the direction on where we're going, the exact timing is so hard. It's so hard to judge. And there, we need to continue to invest and we had a diligent permit. On the ability to make money, I assume that's what you're asking. Will it become fewer operator connections and therefore, will it become harder to estimate demand and make money, I assume that's what you're saying. And we think that I think we're 2 things that are happening. 1, there are multiple technologies rolled out. So we have RCS, whether a set of connections, fewer than it would have in the SMS space. And then you have OTs, where there are a set of other connections, while again fewer to WhatsApp. You only need one connection and to do globally. On the other hand, there are multiple whatsapps and then multiple different formats. So there are fewer connections, which would, which would, again, which would make it harder to make money as a minimum. On the other hand, the connections are more different. So the differences in between them are relatively large. But then you have on top of this, you have a software layer in order to create this type of more advanced message formats. You need a more advanced software layer which is countering that, which makes it easier to make money because you provide more value. So all in all, we believe that it's a good market going forward. And we believe that the ability to make and to make money going forward is strong, and that's why we're making those investments. Is the risk? There is always risk, of course. But we believe we're doing the right investments in capture this market. Yes. May I just ask on the software that you talked about? Is that fairly generic or is it the highly sector adjusted would you get good leverage out to the investments you do from a leverage point of view? It's a good question. And our strategy is to do to be a SaaS platform. And then our strategy is to do it across industry, I wouldn't call it generic, but across industry. In order to go for scale. I mean, we're a scale business. We want to be across the industry, have a soft platform for it, and we want to have partners but as resellers or application service providers that do the industry specific or customer specific adaptations. So that's our strategy, and that's what we're trying to, and that's what we are pursuing. And yes, that's our track. May I ask also on, a growth potential? We see the PSD2 Director has, I guess, started here in Europe. And I think one of your U. S. Competitor highlighted this as a potential growth trigger ahead. I guess you also have quite good strength in the final sector. Can you comment on this PSD2 directive as a potential volume trigger for in Europe. So I think you referred to the regulation that asks banks to send notifications about certain thresholds for transactions. Correct. I think you're correct in that this is a potential market driver in that sector. And you're also correct that we have large exposure to financial sector. That said, when you come into a particular use case, of some sort. There are multiple technology options. And that varies also geographically, which are viable and workable for different banks in this instance. I think this, yes, this is a potential. We haven't quantified it. We haven't seen it yet, but there is some logic to what you're saying. Okay, thanks. And the last question, if I may, it would be on I might have missed this on the prepared remarks, but on the working capital build, you expand this as cash management among customers mainly, I guess. But any specific happenings in Q1? Should we expect this to normalize here in terms of DSO? Coming quarter? Or are we at higher levels because cash management will be, they will be more aggressive going forward as well? Yes, I mean, I think as a general comment, we see enterprises being more, more tough with sort of how they're managing their own cash. And we can also see that on the operator side, where where we have a large portion of our cogs. But at the same time, I mean, working capital is an item that does tend swing from positive to negative on a regular basis. And if you look back at our historical results, I think it has been development four quarters in a row. So this was a swing in the other direction and I don't think we are ready yet to give you good guidance on sort of how that will develop from quarter to quarter, that will definitely be an ambition to get that. Given that we are in mid May now, would you have would seen a normalization since late last March? Yes, I think, I mean, again, it's very, very difficult to San Diego and to say exactly how the working capital would look like when we come out with our Q2 results. I can stay with the fact that it tends to swing quarter to quarter. Your next question comes from the line of Frederic Ometto from Danske Bank. Thank you very much. Congrats for a good report. My first sort of housekeeping question to Rochean is the IFRS 16,600,000 in the quarter, is that mostly derived in the enterprise division that sort of a small question. For Oscar, the larger question, you stated in the beginning of your prepared remarks that 5 of 8 of 10 largest tech companies. You have significant traffic at 5 of the 8 you have relationship with today. Could you elaborate a little bit on the 5 that you have high traffic today? Do you work with them on sort of new projects? Can you see additional potential deals coming through the next coming, maybe 1, 2, 3 years? Is that something you're running for? And then also what will it take for the 5 to go to 8 where are you on that sort of timeline? And can you elaborate a little bit on that? I can start with the simpler one. Yes, a large portion of that is, of course, affecting our enterprise business. If you want more details on that, we can take that offline as well. Thank you. And on my question, Yes, we of course try always to work with our customers to win more projects and win more traffic within any customers we have. We have a specific focus on these big ones. Of course. And so we have specific focus to make us more strategic and to understand more what opportunities are there in them. Because there are, I mean, these companies are very, very large, and you find new departments, not every day, but but there are very, very large and they have traffic and opportunities in many, many different places and that's a key strategic focus area of us. So yes, we're trying to do that. Yes, there is potential. Is it certain that we will win it? No. But that's obviously what we're working on. Ones that are not there. So, that's in a mix of being Well, you've got to understand working with these customers. Even if you would sign them, there is no commitment ever to, right, I will give you this much much traffic or this is exactly how I'll run it. And then tomorrow, they may do something different. So So you don't know when the traffic and how much traffic will come. It is only based on your performance. So if you perform well, quarter by quarter, you know, day by day and then you tend that you tend to build a good relationships to them and you build up traffic volumes. So the ones that we haven't gotten significant traffic with are either in a stage of, you know, either in a stage of do we want to sign them or it's in a stage of having been signed, but for various reasons, traffic hasn't ramped to a significant level yet. Yes, I understand. But elaborating on that, the 3 that remains this up to 8 of them is it so that you have signed those 3 completely with agreements and you have also done the necessary implementations of technologies. So it's the platforms are in place and everything, and they are they know they can use you and sometimes they maybe try off and the but it's not really volumes. Is that how I should read it. I think what we've said previously is that at least 5 nanometer 6, which said meaningful meaningful volume. The remaining ones were in some form of dialogue or commercial relationship where we are working, of course, with the ambition to over time increase volumes and it's a little bit hard to be more specific than that, we're afraid. Okay. Thank you very much. We have no further questions. Okay. To as a summary then, I mean, we're very happy to report this type of strong results. It's a quarter where we have a strong tailwind from all of the different areas. We have U. S. Big tech. We have personalized video. We have voice and video, and we have the business and we have the currency tailwind. So all of that all taken together gives a very strong quarter result. We're proud of that. And we're very happy to be able to report that. And obviously, you know our financial targets and we continue to work on a long term basis to reach different financial targets of financial and adjusted EBITDA per share growth. So that's what we're currently working hard to hit on in the long run. And going forward, as we have said, this business is good. It's good today. There's a lot of traffic we want to make money today. As you can see in our figures, there's also a combination of a growth market tomorrow. And the big thing there now is to position ourselves to take their growth markets. And it requires significant investments, which we're doing, and, but it's very hard to know exactly when they will hit but we're very confident on the market on the non bets we're making in the it's the right bets exactly timing wise, it's hard to time when it will come. That said, Thanks a lot for this call. That does conclude our conference for today. Thank you for participating. You may all disconnect.