Good afternoon, everyone. I'm Vineet Chhangani , Morgan Stanley Tech Banking. Today we're here with Stefan, CEO, Cerence, and Tom, CFO, Cerence. Thank you both for joining us. Maybe just to kick things off, Stefan, why don't we talk a little bit about what Cerence is about, what's the genesis of the company. Maybe give the audience a little bit on the company and help them understand.
Sure. Thanks for having us here, Vineet. Good morning again. Yeah, Cerence is a voice AI company spin-off from Nuance in 2019. Our focus is on conversational AI interaction especially in the transportation market: cars, trucks, two-wheelers. Literally, we're working with more or less all OEMs across the globe here in the United States, in Europe, in Japan, China, actually everywhere. We have a huge penetration rate of 54%. We see also a strong adoption to our new technologies. Monthly active users are growing year-over-year by 30%+ which is phenomenal. Yeah, and now with generative AI large language models will become the new AI agent also in cars. That means we have developed one conversational AI interface across all application for completing tasks based on user preferences so drivers, co-drivers and passengers in the car. Nevertheless, it's much more than large language models.
We have also produced an AI computing platform for our partners especially in the automotive world. Just think about multi-seat intelligence emotional AI and multimodal interactions here. This platform is also independent of the market segment. You can also apply to any other opportunity in the market for example AIoT.
Awesome. And just, it took us less than a minute to start on the topic of AI, and that's been the theme for our conferences here. You obviously announced the partnership with NVIDIA. You launched a product, CaLLM. Maybe double-click on that a little bit, Stefan.
Yeah.
How do you see this LLM working particularly with your customers and what your product offering is about?
Mm-hmm. So so NVIDIA is a very important partner for us. Just think especially in the automotive world you have to produce maybe large language models for roughly 30 languages. Our approach is hybrid so solutions running in the car and in the cloud. With the support of NVIDIA we have full AI access to the infrastructure software and also hardware. Here we can produce our OEM-specific branded solutions large language models in record time. We have also access to NVIDIA engineers which is also important to optimize our solution. And we own also a huge data set in the automotive world over 60 billion tokens. This has a huge value for creating this OEM-specific models.
Yeah. And Stefan, just because we hear a lot about AI, I wanna know a little bit about just the vertical that you're in right now to your comment about data. How does that differentiate you particularly as.
Mm-hmm.
Everybody's talking about AI, but there is something unique about your product and the platform.
So at CES we have re-cemented our innovation leadership especially in the transportation space. Maybe you have heard also about our joint press event with VW Group where they have introduced our first AI solution where we brought together the best of two worlds namely ChatGPT and VW's so-called IDA in-car assistant. It's not just bringing in ChatGPT it's much more to it because we are enabling also OEMs to feed the system with their own information right. For example you can ask in a VW car what is the best VW car maybe the ID.7 or brand it's not a GM or a Ford or a BMW right. So the OEM has full control about it. And this gave us a tremendous opportunity also with other OEMs.
We had also already, right after this announcement with Škoda and SEAT. You will see more from the VW Group over the next couple of months, but they will be also followed by other OEMs across the globe here or even in China, right. In China you cannot leverage ChatGPT. You have to deal with other third-party large language models. Nevertheless, for also reducing costs, which is very important to OEMs, and also for having this high response time behavior so a very snappy solution, we are leveraging actually also our large language models, right, so that we can also have this kind of answers in real time. And the beauty of this solution is, for example, if you say, "I need a coffee" as a driver, the system has all of your preferences, right.
And then it's our directly connected to the navigation GPS system, right, and brings it to your preferred coffee shop, yeah.
Mm-hmm. And Stefan, as we think about what the future may look like and obviously you're in the best seat here, no pun intended, with the AI capabilities you have. Help us understand like what does that look like because you have the front seat on what OEMs are thinking about using your technology. What does that roadmap look like with AI?
So, first of all, all of our underlying core technologies are AI-based, maybe on neural nets and other stuff, right? I think we are a global player in the market. We offer more than 70 languages and we own all underlying technologies from audio AI, yeah. It's just starting for hands-free communication but also for multi-seat opportunities, right? Private calls in the car up to text-to-speech to automatic speech recognition and of course natural language understanding. On top, we have also multimodal capabilities, right? The interaction with a system with GPS data with sensor data. We call it proactive AI and we're combining everything together. In the past, Cerence was considered more or less as a component provider, but now we are an innovation leader here and we are providing the complete solution, yeah.
Therefore, we have created also a new assistant called Cerence Assistant with NLU Plus. And here you have actually unlimited opportunities. One of our first customers, for example, is BYD, yeah. You have multi-intent opportunities. You can say in one shot, open the window, I want to listen to Madonna, and whatever, yeah.
Mm-hmm.
In one utterance, right. You have also a lot of opportunities for doing information retrieval, yeah. You can just say okay what about this or tell me about this. You see a warning light say oh what do I have to do now right. These are really cool features right and compare it to solutions built five years ago or even ten years ago it was more or less command and control. Now you have the full flexibility for natural language understanding really a natural interaction with users drivers and co-drivers right. And what I said also we launched also a system with Great Wall Motor saying okay we have multi-seat experience right. People can talk concurrently to the system and will get their response yeah. One can say in the back I would like to see a movie from Netflix blah blah blah.
The other say okay make a phone call right. You have also this isolation, this multi-bubble zones in the car. It's all produced by us. It's much more than just providing a conversational AI solution.
Yeah, and I think for us what this new kinda what we call the immersive cabin experience with all of this technology and then being able to do that with our technologies and our capabilities but branded by the OEM.
Mm-hmm.
The other differentiator that we have is the OEM owns that data.
Mm-hmm.
And now, through our solutions, can also design how they want that to work. And that's all integrated into one platform. And not only, I think, have we moved from being kind of a component supplier to be this, you know, integrated solutions provider around this.
Mm-hmm.
immersive cabin. I think what the teams saw in CES was it flipping a little bit to where the customers are pulling on us.
Mm-hmm.
To get at this technology.
Mm-hmm.
Where I think for a long time I've been involved with this business for 15 years when it was part of Nuance.
Mm-hmm.
You know we had to go push this. We had to go sell it. We had to.
Sure.
Get people to implement this. What we saw at CES, you know, the press release with Volkswagen, which was in the car and working, right. It wasn't a test. We had a bunch of people come in and try and trick it. They thought it was just a demo and it just worked.
Mm-hmm.
Perfectly. And then what happened in the rest of the show over the next three or four days is OEMs started coming to the booth and saying, "I want this.
Right.
How do I get this right? Which has led to like this really huge expanded pipeline that our sales force is off trying to drive. The other thing from a financial standpoint just so you understand the financials so Stefan talked about embedded. That's a one-time license for the car. So that revenue is taken up front. That's where we have the 54% penetration. So some piece of our technology is in 54% on a trailing twelve months of every car produced. On top of that 54% we add about 21% of those get a hybrid solution which includes the cloud. That's a service agreement with the OEM. That route we get the money up front which is great. Then we amortize the revenue over the service period.
And then we have a small professional services group which allows us to create that differentiated experience for the OEM which is very different than what the.
Mm-hmm.
The big tech companies will do. So I think we're at a really cool.
Mm-hmm.
Inflection point here.
And we're looking also at the gross margins for embedded. It's in the mid-90s% right?
Yeah.
For connected services mid-70s% and even for professional services mid-20s%.
Right. And so maybe Stefan Tom as I think about this maybe one way to put this is vertical software platform.
Mm-hmm.
That you have. To your comment about the data and some of the big tech competing, the fact that you're playing independent is a huge advantage, which is why all the OEMs wanna come to you. As we think about AI in the future, it seems like you're very well positioned for that. Is that fair to say?
That's a fair fair statement, right. And that was also actually the outcome of CES, right.
Yeah.
So we have a huge post- CES momentum here. Coming back to the VW where we deployed the solution from concept to product maturity within less than 3 months, that's also kind of new innovation speed, right? AI innovation speed, right. VW up to the CEO, they're very pleased with the solution, right. And you know, it's development times in the past was roughly 12-24 months.
Mm-hmm.
China is always a bit faster, but now it's in the range of 3-6 months, right. And this gives us new opportunities, also when considering those cloud solutions, right? So we have now also the opportunity for upgrading cars on their own, yeah. So platforms.
Okay.
Can already escalate, yeah.
Just kinda building up on that a little bit, your momentum in the recent earnings call, you talked about the growth in China with Chinese OEMs.
Mm-hmm.
Maybe talk to us a little bit about what you're seeing in different geographies and?
Yeah.
Where you're seeing the most traction.
So what I see and I'm spending a lot of time in China companies like BYD Great Wall Motors NIO Li Auto Geely or traditional OEMs like SAIC putting a lot of attention to the in-cabin experience. And Tom mentioned it's so-called immersive in-cabin experience, right. And here we are well positioned. And we can also learn quite a lot from those OEMs because their speed in terms of from concept to deployment is tremendous here, yeah. I was also two weeks ago in Japan, meetings with Toyota Subaru Mazda Honda, right. Also here Chinese OEMs were normally always very traditional, yeah, culture-driven, yeah. But also here they have a new speed for bringing in this new in-cabin experience. And it's independent whether it's a typical combustion engine or EV, right.
So we're not affected by those elements here, which is great for us, yeah. I think there's a huge appetite for adapting to our solutions, right, especially when it comes to this multi-seat intelligence where also passengers can interact with the system.
Mm-hmm. Maybe switching gears a little bit, talk to us about Cerence FOU agreement that's coming up for expiration soon, just for the benefit.
Mm-hmm.
For the audience, the spin-off of Nuance had you. I wouldn't call it restricted but focused on automotive. What does that mean? What are some of the opportunities in AIoT that you could potentially explore?
Maybe let me start first and then I will hand over to Tom because he did all the transition when he was running the transition office at Nuance here. Yeah, we had some FOU constraints I think for the next two quarters. So we are also very excited about new opportunities generating new revenue avenues for the company here. We are already also quite successful here last quarter. We launched four products with companies like Motorola, Zebra, also in China and in Korea. We see actually four areas where we can also bring a lot of value to customers: industrials, wearables, smart home, and also in the health well-being segment here. Currently our focus is on typical voice control, yeah, on audio processing, voice biometrics, but also information retrieval.
Just think about a car manual. You can also easily apply it to a device manual, right? For example, for medical applications, so on, right. And we're seeing also here a strong demand for some of the key players here across the globe, especially here in North America.
Yeah, I mean, just clarify the field of use restriction worked both ways, right. So Nuance Microsoft couldn't compete in the transportation space, but they just so you know we didn't violate the FOU, and Stefan said we launched some products in the last couple of quarters. There were certain technologies that were developed in Cerence that weren't subject to the field of use. So we got to launch this a little bit in some defined areas to get this going. So we put a small technology team that really takes our core technology but then sometimes has to quote miniaturize it or get it to a point where it can go into a smaller device. We've hired a couple of business development people. So we got to kinda launch this early.
And then at the end of September when the field of use expires you know then kinda the world's our oyster and we can expand with all of our technologies into some of the areas that Stefan talked about. We're not really worried about the reverse coming that Microsoft's all of a sudden gonna come in and swoop in and take the automotive business the same way as we're not gonna swoop in and take their core healthcare business. Because both of these businesses require really deep understanding and lots of data and language data.
Mm-hmm.
They have that on healthcare. We have that in transportation which is why we can leverage it in these large language model solutions for the OEMs. They don't have access to that post the FOU. They'd have to go collect all of that.
Yep.
I think it's a great opportunity for us after the field of use to grow that segment of the business.
Yep. No thanks. Thanks for the color there. Maybe talking a little bit about how you've changed the management team. Recently you've added new members to this new management team, including new CTO, new CRO. Talk to us about the additions and what's the recent takeaway from how they're.
Mm-hmm.
Thinking about the company going forward.
Yeah. So actually I feel very good about the management team now what we did over the last 1.5 years. We brought in Nils Schanz as product officer from Mercedes. He was responsible for their MBUX solution. So for the digital experience at Mercedes then we brought in Iqbal Arshad. He was prior to Cerence at Google Lenovo Motorola. So it's not just automotive. And he has a great background when it comes to AI. He's driving the CTO organization and he's driving all core technologies including the new Voice UX solution which is based on a large multimodal model actually which is very action-oriented which is actually needed if you're talking to device or working with devices here. And then we have also Christian Mentz. He started in October.
He is from Amazon and at Amazon Automotive or the Smart Vehicle. He was running sales, business development, and professional services. And now he's running sales for us and marketing. And he's doing a terrific job for Cerence. And he is also well connected across various OEMs, which is actually needed here, yeah. So we see already the results from this new business team in record time, right. So a proof point for us was CES, yeah.
Mm-hmm.
We got really extremely positive feedback not just from OEMs but also from investor analysts and also from journalists here. Yeah and then we had also another unfortunately or not unfortunately.
Mm-hmm.
I mean, Tom wants finally to retire, yeah. He looks like 50 years, yeah. And.
I'm not.
He jumped in when we had a need for having a really strong CFO. It's a pleasure working with Tom, right. And you know we have also some good links to Dan Tempesta who was the former Nuance CEO. He just finished his work at Microsoft, right. And we thought it was a great opportunity if he can step in and support us. I was working with Dan when I was running the automotive division at Nuance, right. Rather than Tom speak he has a much longer relationship with Dan.
Yeah, I mean, I've been involved with the auto business in Cerence since 2008. As Dan joined Nuance 2, 3, or 4 weeks before I did. And I led the spin in 2019 and joined the board. And then just about 2 years ago stepped in to support the team as the CFO. And I will reiterate what Stefan said. This is the strongest operational leadership team we've had.
Mm-hmm.
I think ever in the company. Not only that they're working extremely well together.
Mm-hmm.
Which is, you know, which is very important. And then I had said all along when I jumped in a couple of years ago that I wasn't gonna leave until I knew we had a really solid transition plan. And as Stefan said, very lucky to attract Dan. He had lots of opportunities. But I've been talking to him for a while trying to convince him that this was the best opportunity for him. And so he'll join us on the eighteenth of the month. And I'll stay for a very short transition just to help him a little. And then I'll continue continue on the board.
Yeah.
I don't think we could have had a better transition at least.
Yeah.
In my specs on the finance side so.
No, that's great. And thank you Tom for doing what you've done. And obviously you'll continue to stay engaged with Cerence as part of the board. So we're at an inflection point. You have a great team. Curious, your thoughts on as the teams around AI have picked up as you look across the landscape, what are you seeing in terms of new competitors coming? We talked a little bit about the large tech. How do you feel your position when you look across the landscape in terms of competition?
Mm-hmm. Mm-hmm. Mm-hmm. Yeah. I think the competition is still the same.
Mm-hmm.
When looking back, right. It's a big tech with with Google and Amazon. In China obviously it's a bit more Baidu and other players. Overall I'm really proud what the team has delivered over the last couple of months. And I think with with our change also in our long-term roadmap strategy to focus now on conversational AI is is paying off. That was also the feedback from CES from large OEMs. They want to work with us. We know also that OEMs selected big tech a couple of years ago are not very satisfied in terms of of yeah branding for example. In terms also of of bringing the right solution into the car yeah depending also on the on the brand experience here. And this gives us now huge new opportunities win back opportunities strategic design wins.
I'm really happy to the next couple of quarters where we see also first results.
Mm-hmm.
Yeah, in winning back those programs. Yeah.
Stefan, maybe just talking a little bit about competition, going a little bit deeper. So, obviously, your numbers speak for themselves and the penetration that you've had. Tell us a little bit about when you go and replace one of these large techs for the OEMs, what are, like, the top two or three reasons why people are choosing Cerence, or we call it Microsoft, or.
It's about quality, yeah.
Mm-hmm.
It's about flexibility. It's about who owns the business logic and also equally important who owns the data.
Yeah.
Yeah.
Data being the main piece in terms of.
It's.
Neutrality.
Exactly.
Okay.
Because they also think about future opportunities for the OEMs right. They're struggling a bit also in leveraging the data connected cloud data right. How can they also create a better data monetization for themselves here right?
Yep.
We just announced also with Renault with their new R5 EV car at Geneva Auto Show a new solution where we're supporting their avatar, right. And it's a groundbreaking technology, right.
Yeah.
I mean you're talking to an avatar you see it's real yeah. And this is based on our solution also MBUX Mercedes also announced at CES their new MBUX solution also with emotional intelligence. And this all is coming from us here right. So we are really grounded here in the OEMs. We're doing also roadmap alignments with key OEMs across the globe right. And this drives new innovation. And we're spending quite a lot in innovation yeah.
Yeah, I think a lot of it's to do with execution, right. I mean.
Yeah.
We've made tremendous strides, I think, under Nils who runs our professional services organization along with the product teams. And then what we hear is that, you know, some of the big techs have kinda overpromised and underdelivered.
Mm-hmm.
and then of course all the other elements that Stefan talked about. So we have had some winbacks and I think we will have a bigger opportunity for winbacks kinda going.
Yep.
Going forward, right?
Thanks, Tom. Maybe, Tom, to you a little bit on the financials. Obviously there have been a few changes in terms of how you're helping investors understand the business model. Recently you talked about the legacy contract with Toyota. Maybe give us a few highlights of like how the business model has changed in terms of like how you're helping investors understand how you track your targets. Just some visibility on that would be helpful.
Sure. I'm the prior CEO and during COVID and the pandemic the company kinda did a much higher level of what we call fixed contracts. And there's two types of fixed contracts. There's prepays in which case these are only tier ones and they're mostly in Asia. On a shipping platform we'll come to us and say hey I wanna buy an inventory of licenses usually 4, 6, 7 quarters.
Mm-hmm.
But we want a discount but we'll pay you upfront. And this has been a contract thing going back all the way to the early days of auto. It's kind of a relationship. It's driven really by the procurement in those tier ones. And then there were minimum commitment deals. So you know under some of the new accounting rules if you have a commitment you take the revenue upfront but then you have to bleed through all of that. There are different structures in that the revenue gets taken upfront but the cash is collected as the cars are shipped. So therefore it's a smaller discount.
Mm-hmm.
Stefan and I stopped doing those when I joined as the CFO. I just didn't think there was the right economic value for those. So we haven't done one almost two years now and we won't.
Okay.
Don't anymore. We are still bleeding through those. On the prepays, we made a commitment last year to only do $40 million of prepaids.
Mm-hmm.
We did 36 so we hit our objectives. We said this year we would do in the 24 for this year so half, because we think our position is stronger. Because most of these decisions these days get made by the OEMs themselves and but they'll still contract through the tier ones. So we hope to bring that down. So why is that important? Well it makes us more of a running royalty or our connected services coming in through the ratable services programs that you run, and it doesn't create all this crazy lumpy.
Mm-hmm.
Lumpiness. So I think that was a big thing. And then the other thing that happened is, we talked about, there was a legacy contract that goes back all the way to 2017 and an acquisition that Nuance made in the auto space that this company had sold a solution to Toyota that had a very, very high price. And it had a 7-year service period. At the time of the spin, Toyota was shipping very few cars with that technology on them but had built up this huge deferred revenue base on all the cars that had shipped prior to the spin. And we have been amortizing that deferred revenue off since the time of the spin. And it's very predictable 'cause there's no new cars going into it.
It had a term, a fixed termination on the service which was 12/20/2025 or 12/31/2025 our fiscal Q1. And we've been amortizing about $8.5 million a quarter off of that. Very predictable. Very transparent.
Mm-hmm.
We've told everybody about it. In Q1 Toyota informed us that they were shutting that service off because they had very little usage. Nobody was really using it. They still had to keep it going so there was a cost element to them. Because they terminated that and weren't gonna use that service anymore, we had to accelerate all the remaining deferred revenue, which is about $76 million.
Mm-hmm.
I'm happier though because again it cleans up the financials on a go-forward basis.
Mm-hmm.
'Cause now you don't have all this revenue. It doesn't have any cash associated with it. You don't have to explain it every day. So and then the other thing we've done is we've kind of increased transparency around billings. We've instituted a five-year backlog model to help people really understand are we are we driving towards our multi-year plan and and objectives. So not only do I think we're in this like awesome position from a technology and a customer standpoint but kind of on a go-forward basis the financials are much easier to understand and will really start to show the real strong trending of the business. And this really awesome model that we have right that you get built on a platform you don't really get ripped off right.
Mm-hmm. Right.
Yeah, and it's not a pure ARR model, but in some cases it's even better, right.
Mm-hmm.
'Cause it's just
Yeah.
You know they're shipping cars on these platforms for years, right? And now with the ability to update the connected services and then keep adding services on top of that and then with this ability to add tech and put this on the road vehicles, it's a whole new opportunity for us. And we've talked about it for a few years, but the OEMs control that relationship. So we're highly dependent upon them seeing value in that 100%. And I think it's another proof point that these products are so good that they actually want to, and they'll have to make an investment, right? 'Cause they'll have to pay us.
Mm-hmm.
Then they'll put them on those cars and then hopefully those customers will see value in it. And then that can potentially drive what they're really trying to get to the OEMs is this subscription monetization opportunity that they all want, right.
And Tom, just maybe expanding on this a little bit more, as you think about the opportunities going forward, particularly around pricing some of your AI offerings, how do you envision that getting rolled out in terms of is it pricing per module? How would you go about pricing those?
Well, again, as I said earlier, I think it's nice that we're starting to get more of a pull from the OEMs. So.
Mm-hmm. Mm-hmm.
There's obviously they're seeing real value here. That should give us some pricing opportunity, and on both the embedded and the connected side. And then the ability to take that 20-20-ish% attach on top of embedded that's a big opportunity because then you get the embedded you get the additional cloud-based services on top of that. And then to the point you can do upgrades to that then the whole value chain goes up. And we're people ask us all the time we're clearly auto production matters to us but what really drives this business is this innovative you know exciting technology that the OEMs really now see how they can can leverage.
Mm-hmm.
That drives up the value per car that we're receiving.
Tom, one more for you. As you think about product development and so two questions there. Help us understand how do you think about the R&D spend going forward? And then the second part was as you lay out more and more software offerings any impact we should anticipate on gross margins?
Yeah, so we continue to invest in R&D at very high percentages of revenue as we went through this revenue transition the last couple of years. Stefan and I thought it was critically important because it's the future of the the company. So we did take a hit to to earnings and to cash flows, but clearly we wouldn't be in the position that we're in and what we've we've announced if we hadn't done that. Iqbal's come in. He's added some new processes and structure to the whole R&D and product development cycle.
Mm-hmm.
We've done some. He's done a reshuffling of resources around. We've done some minor kinda restructuring activities, but we have a really strong global team.
Yep.
Clearly, there's an appetite always in R&D for more and more spending, but we're aligned with Iqbal.
Mm-hmm.
As the revenue grows there should be leverage there. Then of course we now have the advantage of leverage with NVIDIA right?
Yeah.
Because we get to leverage their R&D resources their tech stack their capabilities right. This is a partnership that benefits both so there's a lot of money going back and forth between the.
Mm-hmm.
The two companies. We're gonna make the money collectively in each of our companies. And then Stefan alluded earlier that you know our licensed business is in the mid-90s.
Yep.
I don't think that changes much. Connected, you'll see it's gonna dip a little because of all the six. It's gonna go way up this year because of the accelerated Toyota. It's gonna dip down a little bit in 25. But we believe steady state going forward we're back in the mid-70s, which is where we've always been. The model is that the small amount of that has to go to ChatGPT will get paid for by the OEMs and.
Okay.
You know, won't go through our P&L, and then, as Stefan said, the PS is about 25%. So.
Got it.
That's how we believe it's gonna play out here. That's what we're driving to.
Yep. That was very helpful, Tom. Maybe I'll pause there to see if any questions before we move on. Nope. Okay. Stefan, maybe talk to us a little bit about EVs and if any impact at all on how you think about your end market.
So, two years ago, right, there was this huge hype about EVs, right, also about creating new in-cabin experiences, right. What we see here, most of the traditional OEMs have adapted. I mean, they're driving now the new in-cabin experience what you have seen, for example, with VW as a traditional large volume manufacturer, which is actually great for us. We're working also with, as I said at the beginning, with the largest EV maker, with BYD, to give you also some ideas about our new speed here. The new Cerence Assistant for Mandarin could be deployed within two weeks. That's in record time, right. This is really needed for this new market here. Overall, I think also with our new AI roadmap, right, we are on a very good path.
I mean our production is still a watch area for us but nevertheless with this new OTA over-the-air update opportunities right we are well positioned for future growth especially in the connected services right. We're discussing also with OEMs new business models right subscription model right. We have endless opportunities. I have to say also the quality of the new in-car assistant right advanced with ChatGPT or other third-party language models right gives a lot of new opportunities also for the OEMs compared to the older in-car systems.
Got it. So, safe to say no impact on you on how you go to the market and.
Yeah.
If anything it's
The only impact I see if you have a time what we had at COVID when we had actually 90 million newly produced cars on a new basis right trending towards 100 million and at COVID it went down to 70 million.
Mm-hmm.
Now it's in the low 80s, right. If you have another supply chain issue or another war in Ukraine or some.
Mm-hmm.
This could hurt us. But nevertheless, I think we are well positioned. We have also a very diversified OEM network. You know, there are already some battles ongoing in Europe, right. The German, French, Italian OEMs versus the Chinese OEMs, right. But we're working with all of them together.
Mm-hmm.
Which is good for us. Yeah.
That's amazing. Once again thank you both for taking the time. I know we're up on time, but we appreciate you both joining us.
Well, thank all of you at the very end of this conference to come and join us instead of running home. Thank you.
Thank you. Thanks again.