Earnings Call: Q2 2010

Aug 19, 2010

Good morning. Welcome to GameStop Corporation's Q2 20 10 Earnings Conference Call. Today's call is being recorded. At the conclusion of the announcement, a question and answer session will be conducted electronically. I would like to remind you that this call is covered by the Safe Harbor disclosure contained in GameStop's public documents and is the property of GameStop. It is not for rebroadcast or use by any other party without the prior written consent of GameStop. At this time, I would like to turn the call over to the Executive Chairman of GameStop Corporation, Dan DiMatteo. Please go ahead, sir. Good morning, and thank you for attending today's conference call. With me today are Paul Raines, our CEO Tony Bartel, our President Rob Lloyd, EVP and CFO and Mike Mahler, our EVP of International. As you know, in early June, we announced these promotions as the next step in the succession plan that Dick Fontaine and I developed several years ago. The team, now led by Paul, is doing a great job at running the business and making significant progress on our strategic initiatives, which you will be hearing about more today. As you can see, we gained significant market share in a market that is struggling for growth. The data suggests that U. S. Software sales slid 7% in the quarter, but GameStop's U. S. Software sales grew significantly. We believe that the slate of new releases for the back half is stronger than last year and the new console add ons Connect and Move will help grow the category and return to positive growth. Also, new console sales in units grew an overall 43% in the quarter and these new users should be very active buying games in the coming months. Whatever you believe, we are well positioned to continue market share growth and manage our business to create shareholder value. Our portfolio of stores has very flexible lease terms and we can right size for the market quickly. We have slowed our new store footage and will continue to do so while taking advantage of real estate opportunities that grow share. Our investments in alternative game distribution methods are well thought out, have synergies with existing assets and give us a hedge on the future without a huge investment. Our investments in other initiatives such as our new loyalty program are working well and you will hear more on this later from Paul. And given the free cash flow we generate, you will hear on how we plan on using this cash to provide even greater shareholder returns in the near future. With that, I'll turn it over to Paul for a thorough review of the quarter. Thank you, Dan. As we begin our comments this morning, we want to thank our team of over 50,000 associates worldwide. The GameStop teams in 17 countries continue to demonstrate our passion for serving video game customers every day and we appreciate them. We saw strength in the core business this quarter, driven by new software titles. New software grew 5.3% as the GameStop model of providing unique content to drive reserves, exciting midnight launches and the best value proposition of buyselltrade drove record market share at launch. Hardware growth was driven by exciting new SKUs from PS3, Black Wii and the new Xbox Slim. The used business, which is overlapping 19% growth in 2Q of 2009 grew just under 1%. Next generation used software continues to grow, while older generation continues to decline. On the hardware side, used hardware sales were impacted by the growth of new hardware. As we have pointed out in the past, the used sales growth lags that of new by 3 to 6 months as customers purchase hot new titles and trade them once they are done playing them. We have built our used inventory levels this quarter through a 10.6% trade comp and that inventory growth gives us confidence on back half used growth. We have seen no competitive impact from emerging competitors in the used business and also have not seen any impact from the 1st user codes in recent titles. We are watching carefully the latest round of competitor entries in the used business, but would remind investors of the extensive competitive barriers GameStop has built around the used business. Rob will give you details around our back half forecast in his remarks. Our customer service metrics continue to improve to record levels as the GameStop team engages customers in store with industry leading knowledge and focus on only video games. Our consumers continue to tell us that we set the standard for the in store experience, thanks to our trusted game advisors and our record market share growth validates that consumer feedback. Our international business continues to face pressure from the macroeconomic environment. Mike Mahler and his team accelerated the rollout of best practices to drive operations improvement. On the merchandising side, we are making progress on integrating our go big launch process internationally and we will launch our first title with unique content globally this fall. As you know, we developed a strategy over the last 2 years to make GameStop a multichannel aggregator of gaming. As part of that strategic work, we defined several technology initiatives and they have been in pilot over the last year. We announced this morning that we will be accelerating our successful strategic initiatives in the Q3 and we would like to give you some color on our thinking in that area. The PowerUp Rewards program, which is the name of our new loyalty initiative is now live in over 500 stores in multiple markets across the United States and we have over 350,000 affiliated members. Our projections put us on a path to several 1000000 members in the 1st year. And in the lead markets, the program is already twice the size of our Edge program. After only 10 weeks in pilot, members represent over 50% of all transactions in those markets. And we are seeing growth in consumer segments that were not participating previously in our Edge program. PowerUp members are shopping at roughly twice the frequency of non members and 15% of members have shopped us 5 times or more in the last 10 weeks. We are also seeing a higher level of trades and used sales from PowerUp members. Publishers are showing strong interest in participating in the program and our Epic Rewards calendar already has a waiting list. 40% of our members have already completed their game libraries online and we now have millions of games registered in the collective libraries of PowerUp members. We believe the PowerUp Rewards program has struck a chord with our customers and we will accelerate the program to be live in all stores nationally during the Q3. The costs associated with that rollout are one of the best investments we can make to increase purchase frequency and deepen consumers' relationships with GameStop ahead of holiday. Now on to downloadable content. In partnership with Microsoft, we started our downloadable content initiative during the Q2 in 35 stores. Consumer acceptance has been strong as gamers enjoy being able to buy add on content while they are shopping with their trusted game advisor. Our assortment continues to grow and our proprietary code server technology continues to serve consumers shopping in store via our digital kiosks and very soon online. We will be rolling out that initiative nationally during August and we'll be adding DLC from Sony during the quarter. As discovery of DLC in store increases, so do the number of transactions with a digital SKU and that number is now 5% of total transactions during the Q2, representing an 80% year over year increase. We are also making very strong progress on our gamestop.com journey and added a major component of our strategy with the acquisition of congregate.com during the quarter. Tony Bartel will give you color on both of these items and our digital aggregation strategy in his remarks. We know that investors have been mixed on their view of GameStop's terminal value and we have spent a lot of time looking at our capital allocation. As a team, we are committed to providing shareholders a return on their invested capital. We have a framework to increase those returns through channel approach that leverages our brick and mortar footprint with emerging digital channels and have a filtering process that examines the ROIC of every major investment we make. Our new stores consistently exceed their pro form a targets and our strong cash flow allows for investments in the digital future while also returning cash to shareholders. Rob will give you more color on our approach in this area. In conclusion, we told you a year ago that we were developing a multi channel strategy enabled by technology innovation to be the gaming aggregator across physical and digital channels and we are delivering on that commitment in a disciplined way. I will now turn the call over to Rob for his remarks. Thank you, Paul. Good morning, everyone. This morning, we announced our financial results for the Q2 of 2010. Total sales increased 3.4 percent to 1,800,000,000 dollars driven by new software sales growth of 5.3 percent on the strength of Red Dead Redemption, Super Mario Galaxy 2 and NCAA Football 2011. Strong sell through of new hardware, up 4% from the Q2 of 2009 also contributed to top line growth. NPD reported a 43% increase in next generation console units sold in the quarter compared to the same quarter last year. GameStop had a 60% increase in its sales of next gen consoles. Comparable store sales were 0.9% at the midpoint of guidance. We expect comps to be positive for the remainder of the fiscal year based on the strong lineup of new titles, new hardware, Sony Move and Microsoft Connect. Following impressive market share gains in the Q1, GameStop continued to take share in the new video game software category. Our quarterly new software growth correlates to a 5.90 basis point increase in new software market share. Considering the majority of the title launches in the Q3 appeal to the core gamer, we expect our new software market share to remain very healthy. Based on year to date results, we are increasing the company's 20 10 worldwide new video game software sales growth forecast from 2% to 5% to 5% to 10%. Net earnings were $40,300,000 and diluted earnings per share for the quarter were $0.26 a 13% increase over the prior year quarter and in line with guidance of $0.25 to $0.27 per share. Consolidated gross margins expanded to 28.7 percent from 28.5% in the prior year quarter as margins in each category improved. SG and A expenses increased as a percentage of sales in line with our previously anticipated increase of 30 basis points to 40 basis points as we invest in strategic initiatives. The FX impact in the 2nd quarter reduced company sales by $13,000,000 due to the European currencies, but the impact on operating earnings was immaterial. Moving on to the balance sheet, GameStop closed the quarter with $289,000,000 in cash. Total company inventory levels decreased 0.6% on a per store basis year over year. We continue to maintain tight inventory control during this uncertain economy. During the quarter, GameStop repurchased and retired 2,500,000 shares of its common stock at an average cost of $20.93 per share using the remaining $52,800,000 available of the $300,000,000 share repurchase plan. As Dan and Paul mentioned earlier, over the last few months, we have projected our future cash needs in order to appropriately define our long term capital needs and build a capital allocation program, which reflects our focus on return on invested capital. We believe the business will continue to produce adequate cash flow from operations over the next 4 to 5 years to fund our prudent and vigilant store expansion and strategic digital investments and acquisitions, fund debt maturities and allow us to develop a plan to repurchase shares on an annual basis. GameStop's return on invested capital as defined by Bloomberg at 13% is in the top half of a peer group of more than 20 retailers in approximately 100 basis points above the average of that group. As we navigate through the remainder of this video game cycle, GameStop is committed to improving its ROIC by at least 400 basis points. This will be accomplished by measuring the returns of the aforementioned objectives both individually and collectively to ensure that deploying cash between strategic and growth initiatives and returning cash to shareholders enhances our current rate of return, while at the same time achieving our strategic and operational growth goals. A few other items to highlight for you. Year to date, the total store base has increased by 99 stores or roughly 1 third of our 2,008 new store growth rate. The effective tax rate for the Q2 was 33.2% compared to 35.2% in the Q2 of 2,009, with the decrease due to accounting for uncertain tax positions. Based on the success of the company's new PowerUp Rewards loyalty program and in store DLC sales pilot, these two initiatives will be rolled out nationally during the Q3. GameStop is adjusting its Q3 diluted earnings per share guidance to range from $0.35 to $0.38 to account for incremental expenses related to these programs as well as for the upfront expenses of the Congregate acquisition and investments in e commerce. This earnings per share range represents a 9% to 19% increase over the prior year quarter. Internationally, our expectations for a meaningful economic recovery in the countries in which we operate have not yet materialized. So we have tempered our second half growth estimates, which will offset the upside we expect to capture from the Sony Move launch and our efforts to drive operating margin. Based on the used inventory and trade in comp improvements seen over the last few weeks, we project that the used products category will increase between 7% and 9% in the 3rd quarter. This growth corresponds to the initial used growth forecast of +5 percent to+10 percent for the full year. We project that $0.03 of earnings per share can be realized in the Q4 from the new customer initiatives and the launch of Microsoft Connect. Therefore, we are maintaining our full year 2010 guidance of diluted earnings per share range from $2.58 to $2.68 total sales growth of between 4% 6% and comparable store sales ranging from flat to plus 2%. We continue to monitor foreign currency exchange rates very closely. At this time, we project that the impact in the Q3 and for the full year will be immaterial when comparing current projected rates to the rates we projected at the beginning of the year. Tony will now provide an update on our digital strategy. Thanks, Robin. I would like to provide an update on 2 of our strategic initiatives, the evolution of our e commerce site and the development of our digital aggregation site. During the quarter, we completed the staffing of our e commerce development team and have begun to execute the roadmap that we developed to drive significant e commerce growth. We have already made significant changes to the website, including streamlining the checkout process, updating our search engine and improving our merchandising features. From a marketing perspective, we increased our paid search and affiliate advertising and have tested several discount strategies to compete where necessary with aggressive price points on the web. Also, we are leveraging our growing database that has over 35,000,000 customer records to drive growth through targeted emails. And these efforts have paid off. In the first half of the year, our online market share has grown by 50% over last year according to NPD. During this time, we were the fastest growing dotcom in the gaming segment. Much of this growth was driven by attracting female shoppers as our market share among females more than doubled over last year. With our development team in place, we will now increase the pace of changes to our website. During Q3, we will begin rolling out a buy online, pick up in store program, fully implement our loyalty program on the web, incorporate the sale of Microsoft and Sony digital add on content, including XBLA, full game downloads and launch our enhanced user reviews social commerce features. In addition, we will launch in store programs that will incent our customers to leverage our website and will increase our advertising sales force to better monetize the quickly growing 15,000,000 unique customers that we see on a monthly basis. In late July, we announced the acquisition of Kongregate. Kongregate represents an integral part of our strategy to become the aggregator of choice in the online gaming space. We looked at many companies that offered an online gaming platform and we chose Congregate due to its fit with our strategy. Kongregate has well designed technology that allows developers to quickly and easily offer their games on the Kongregate platform and on mobile phones running the Android operating system. From integrated advertising and micro transaction monetization methods to a robust achievement system, Kongregate provides developers with tools to maximize their revenue. This is evidenced by the fact that over 8,005 100 developers have launched over 30,000 games to date on this site. Kongregate also syncs well with our existing customer base. While Kongregate has games across all genres, its base of over 10,000,000 monthly users skews more male and more core than most online gaming sites. This provides for a natural transition to leverage the 500,000,000 visits that we see annually in our stores and the 15,000,000 monthly users of gamestop.com to send traffic to Kongregate site. Kongregate will have no material impact on 20.10 earnings and we do anticipate that it will positively impact our ROIC calculation in the coming years. With that, I'll turn it over to the moderator for Q and A. At this time, we'll take our first question from Bill Armstrong, CL King and Associates. Good morning. Your gross margins on used games were up only slightly against fairly depressed margins a year ago. I was wondering if you could discuss that in a little more detail. And was that possibly a result of the mix between used sales U. S. Versus Europe? Thanks, Bill. Rob, do you want to take that question? Sure. We're always more promotional in the Q2 of the year than we were in the Q1 of the year. So, that's why you that the rate was more comparable to last year. It is up slightly. We were promotional again in the second quarter, not as promotional as we were a year ago in the U. S, but slightly more so internationally. We are continuing to make the improvements that we set out to make by rolling out best practices. And again, I think for the year, you'll see that used margin in the range of 46% to 49%. 46% to 49%. Okay, thank you. We'll take our next question from Arvind Bhatia with Stern AG. Thank you. My question also on the used side. Can you Rob talk about what you said on the 7% to 9% increase? That's I think your Q3 estimate, but is that also your full year estimate? And then can you also talk a little bit more about the inventory the used side that you said, I think was up 10% in the Q3? Can you talk about that real quick? Yes. The inventory on the used side is up about 5% over last year. It's up considerably from the beginning of the Q2. As Paul mentioned, our trade comps were very strong. Those trade comps and the inventory position are what gives us confidence in the 7% to 9% increase, which is what we expect for the Q3. For the year, we're still expecting that 5% to 10% range. And then you didn't touch on the hardware projection for the year. Before, I think you had said a negative 5% to negative 15%, if I recall correctly, for the year. Have you changed that projection? No, we haven't. Okay. So that stays the same. Okay. And then can you tell us what your projection is at this point for cash at the end of the year given you've done your buyback, you've made a few acquisitions this year and you're putting in more CapEx sounds like on some of the digital initiatives. Can you talk about that? Yes. At this point, what we see at the end of the year in terms of cash is not much different than we had talked about earlier in the year, which is in that $900,000,000 to $1,000,000,000 range. We'll take our next question from David Magee, SunTrust Robinson Humphrey. Yes. Hi. Good morning. Hi, David. Talk about the stores that the PowerUp stores and what happens with the sales and the margins once those programs were put in place? Paul? Sure. How are you doing, David? We really aren't ready to disclose a lot of details around sales and margin, but we can give you some pretty good color around the program. The first point is we are seeing tremendous participation. We called out the number of transactions that include a PowerUp member that gives us great visibility when over 50% of the transactions have a PowerUp member associated with them. So we can look at that consumer behavior pretty well and 50 is not our goal. Remember that Micromania in France where we modeled some of this was significantly higher than that and they've been added for 10 to 12 years. We also know that frequency is up significantly of PowerUp members versus non PowerUp members, which means we're getting a lot more visits from the same customer and getting also significantly more trades and used business. That's going to drive lots of comp growth, we think, in the markets where we roll this out. And candidly, David, we've been surprised by consumer acceptance. Everybody in our organization has been a little bit we were optimistic about the program. If you go to those markets where we're live today, what you'll see is a consumer, almost a frenzy to get into the program. We also are very encouraged by our game libraries. The reason that's important is we now know what consumers have bought from us, what they would like to have from us and what they could potentially trade with us. So that's going to give us an opportunity to market to them and drive sales and comps as well. So this is more than just your best customer sort of signing up and staying with your behavior, you're actually seeing them change their behavior after becoming a member? We're seeing lots of interesting things, David. One is we're seeing more frequency. So yes, there is a change in behavior. They visit us more frequently, want to know what's going on at GameStop today. We're also seeing more use and more trade activity. The program is also very incremental. One of the things that we've been surprised by, we've had an Edge Card program for many years at GameStop. There's a large amount of people who are not Edge members who are signing up for the PowerUp paid program, which means we're getting a lot more non core audience participating in the program, a lot more moms, a lot more female shoppers, casual shoppers, etcetera. All of that is rolling up into to us just about the best idea we've got to get in ahead of holiday and be ready for those consumers. Great. Thanks, Paul. We'll take our next question from Mike Hickey with Janco Partners. Good morning, Dan, Paul, Rob, Tony and Matt. Thanks for taking my questions. Just a couple of housekeeping sales from new stores in the quarter, Rob, and the FX impact for the quarter? I'm sorry, sales from new stores in the quarter? Give me just a second on that one. The FX impact we talked about was approximately $13,000,000 on sales. Okay. We can follow-up with the other one. I'm curious on the PowerUp program. Well, I'm just curious to you guys' outlook on how holiday sales will break this year and if your PowerUp program would have the opportunity to potentially accelerate the break for you? Well, I think, Mike, obviously, we think it accelerates and improves stickiness with consumers, otherwise we wouldn't be doing it. We're making a decision to go out and spend more on getting this program in ahead of holiday. So I think that the 2 or 3 areas where you'll see it impact is frequency of shop and shoppers coming in to see us and also our ability to know what they're looking for from their game libraries will be an important factor. We're also seeing a huge impact with our associates. Our associates are energized by the program. It's been a real positive around customer service and been a positive around used and trade. So we too soon for us to give you a projection on that, but internally we're running a lot of numbers and we believe we'll have a significant impact by moving the program up. Mike, the sales from new stores, so non comping sales were about $56,500,000 We'll take our next question from Tony Weibel with Janney. Thanks. I was wondering if you guys can give us an update on your overlap with Blockbuster stores and if there's any opportunity in the event that Blockbuster ends up filing for some kind of prepackaged bankruptcy or restructuring? And then I had a follow-up. Okay, Tony. This is Dan. I will tell you that over the last year and a half or two years, Blockbuster has closed a lot of stores, so has Hollywood. And that has given us real estate opportunities into centers that heretofore we could not get into because they had exclusives. So that has been a positive. So I would think that as they continue to close stores, again, it gives us opportunities, especially into highly dense urban areas. If you take like the LA area, etcetera, for example, which is very difficult real estate market, it gives us opportunities to get into centers that we've not break up those stores into 2 or 3 smaller stores. Yes, that's break up those stores into 2 or 3 smaller stores. So yes, it's a positive for us to get into to grow market share in markets that we heretofore couldn't get into. And on your guidance, I assume that you're still expecting the 3DS to be a early next year launch as opposed to falling into this year? That's correct. Okay, great. Thank you. We'll take our next question from Sean McGowan with Needham and Company. Yes. I'm curious about your comments on competition in used games as well as the embedding of codes that need to pay for. How is it that you're measuring that that gives you confidence that you aren't seeing an impact? Paul, do you want to take that? Sure. Hi, Sean. We'll take it with the competition. So we know where all the competitor stores are. There's been several big box competitors who have launched used business and we measure the run rates and impacts of used sales of all the stores adjacent to them and we simply have not seen an impact. Now, some of the big box competitors have not really even begun yet. They've announced that they've not started. We haven't seen that. And then another of the big box competitors began with a small amount of stores. We haven't seen any expansion there. So on the competitor side, we just don't see the impact yet in our stores, but of course, we take them seriously. We watch them closely. Believe us, a lot of the traffic in those competitor stores are our guys testing the process, etcetera. So we're all over that. As far as the first use codes, we look at the titles that have the first use codes and we look at the trade volume and the used inventories on those and just haven't seen an impact yet. Just a point on the first use codes, remember that only 25% of used buyers play online. So when we talk about those first use codes, it's not a large audience of gamers that you're talking about. That consumer is really not as much of an online player. They're moving that way some, but it's still not a very large audience. And effect, Sean, given the fact that we now sell DLC in our stores, we actually can make it very easy for that customer to access online pass because of the sale of DLC. Yes, I was going to ask about that as an advantage. So that's good. And a housekeeping question. So what should we expect going forward from the P and L for the income attributable to non controlling interest? Rob, I wouldn't expect it to move much from what you've seen in the 1st couple of quarters. It will take a that's there's a couple of things in there, our Irish operation on the retail side and Jolt are what's in there. And I just don't expect a lot of movement on that say in the Q3. Okay. Thank you. We'll take our next question from Edward Williams with BMO Capital Markets. Good morning. A couple of things. Can you comment a little bit about the capital Ed, you really broke up. We couldn't hear you. I don't know if you're on a speaker or what, but we didn't hear the question. Hello? Operator, let's take the next question. We'll take our next question from Robert Higginbotham with Goldman Sachs. Thanks. Good morning. I'd like to revisit the used business for a moment and I want to try to better understand your confidence in the 7% to 9% growth 3Q forecast. You've talked to the business seeing a 3 to 6 month lag versus the new business. This quarter we saw significant deceleration in the new business. So I want to try to reconcile those two things. And also you talked to your confidence in the forecast coming from your, I guess, in stock position given strong trade ins and inventory. When I look at total use growth up 1% versus inventories up 5%. It seems as if your sell throughs didn't keep pace with your trade ins. So I'm trying to understand where that confidence in that number comes from on those two fronts? Thanks. Paul, would you take that? Sure. As we said, there's a lag time from 3 to 6 months. So the first thing we would say is that inventory you saw us build will sell through during the back half. So we called out the trade comp because our trades, meaning our inventory coming in from customers is up pretty significantly year over year and we think that's going to increase our inventory position from where it's at even today. The first initial 2 weeks of the quarter are also within what we would call our guidance and we think that for those reasons, you're going to see that that inventory will sell through. We also saw that in this quarter, used hardware was pressured by the sell through of new hardware. So that was another factor in the past quarter, but largely inventory level driven, that's going to lag, but it's going to come through as it always has in the cycle through the back half. Yes, Robert. Again, inventory given the traffic that occurs, the tremendous increase in traffic in Q3 and Q4, the inventory sales are always a function of the inventory. And so with the inventory being up, the sales have always been up and we would expect that to continue. Got it. And to help better understand that, I mean, could you tell us what your used inventory was up in 1Q for instance to try to understand how 2Q used sales came through relative to that inventory position starting the period? Sure. At the end of the Q1, our inventory position was flat, which as Dan said, there is a strong correlation between inventory levels and the sales growth that the used sales growth that we get. You mentioned Paul that the coming off the end of the year, I think we were 3% or 3.5% down from the year before. So we've been holding through the 1st 2 quarters. There's also a better quality level of inventory as well underneath that trade comp, because we've been bringing in a lot of the hot titles were released through the 1st and second quarter, so that's also a good sign. I see. That's very helpful. And one last question and maybe I missed this, but I understand your capital allocation strategy in terms of concept, but I was wondering if you could clarify the timing of pursuing that strategy. In other words, is it should we expect you to resume share repurchases in the near term to drive that improvement that you're looking for over time? Or is that something that's more of a long term target and maybe at this point you wait till you get past holiday? Well, at this point, we are as I stated in my remarks, we're developing a plan to return cash to shareholders through buybacks on an annual basis. And I think that's all I can speak to about that right now. Okay. Thank you. We do have time for one final question coming from Mike Hickey from JanCo Partners. Thanks for the follow-up. I was just curious if you guys have any special events planned for the Halo Reach release? Tony and Mike, do you want to take that? That's a great question. One of our key international strategies in 2010 is to drive market share gains on the launch of new titles by focusing on expanding midnight openings, driving reservations, offering exclusive content and delivering value to our customers through our buy sell trade model. For the release of Halo Reach, we partnered with Microsoft at a global level and we are very excited to be able to offer our customers in all 17 countries the exclusive new Spartan Molner Armor that can be used in the game when they reserve their copy only with GameStop prior to the title's launch. This is just one example of what we can accomplish when we coordinate our go big strategy globally for our major new releases and deliver unique and compelling value to our customers worldwide. Yes, Mike, one of the things that's I think a great sign now is every time Tony and team have a merchandising discussion with our global partners, Mike and his merchant team now are more and more increasingly at the table. So our ability to distribute these games on a global basis is really a weapon we have that really no other retailer can match. And we should see a lot more of that. Okay. Well, thank you for attending today's conference call. I'd leave you with a couple of thoughts. One is that video game hard console sales were up 43% in Q2 and that would have to translate, of course, to increased software sales since hardware sales are up, software sales in the back half of the year. So we look forward to it would be between that and a strong release schedule to a strengthening video game industry through this back half and we also look forward to a continuation of our market share gain. Thank you very much. This does conclude today's conference and thank you for your participation.