Vipshop Holdings Ltd (VIPS) 2020 Q2 法說會逐字稿

Ladies and gentlemen, good day, everyone, and welcome to Vipshop Holdings Limited Second Quarter 2020 Earnings Conference Call. At this point, I would like to turn the call to Ms. Jessie Fan, Vipshop's Director of Investor Relations. Please proceed.

Thank you, operator, and thank you for joining Vipshop's Second Quarter 2020 Earnings Conference Call.

Before we begin, I will read the safe harbor statement. During this conference call, we will make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on our current expectations, assumptions, estimates and projections about Vipshop Holdings Limited and its industry. All statements other than statements of historical facts we may make during this call are forward-looking statements. In some cases, these forward-looking statements can be identified by words or phrases such as anticipate, believe, continue, estimates, expect, intend, is or are likely to, may, plan, should, will, aim, potential or other similar expressions. These forward-looking statements speak only as of the date hereof and are subject to change at any time, and we have no obligation to update these forward-looking statements.

Joining us on today's call are Eric Shen, our Co-Founder, Chairman and CEO; and Donghao Yang, our CFO.

At this time, I would like to turn the call over to Mr. Eric Shen.

Good morning and good evening, everyone. Welcome, and thank you for joining our second quarter 2020 earnings conference call.

We delivered a robust financial and operational results in the second quarter of 2020 due to our solid execution on the merchandising strategy. In the beginning of the May, we saw strong recovery in apparel demand and act quickly to help our suppliers destock their inventories after COVID-19. We launched a successful promotion campaign in June, offering customers the best view while helping our suppliers monetize their inventory more efficiently.

During the quarter, total active customers grew by 17% year-over-year to 38.8 million from 33.1 million in the prior year period. In addition, our conversion rate and the customers business both improved. In the second quarter, conversion rates for our app increased by 10% year-over-year and the repeat customers as a percentage of total active customers increased to 90% from 87% in the prior year period. Looking into the second half of the year and beyond, we will continue to focus on enhancing the product offering on our platform, providing our customers with a differentiated experience as compared to other marketplace platforms. We believe we are well positioned to continue to gain share in China's discount retail market, delivering solid shareholder return over time.

Lastly, today, we announced that our CFO, Donghao Yang, will step down from his current position in November. I want to thank -- I wanted to take some time to thank Donghao for 10 years of hard work and the contribution to Vipshop. Our Board has appointed Donghao as a new non-Executive Director effective on the day of the change of his position. We are delighted that he will continue to be the part of the Vipshop family as a member of our Board. Donghong has serviced as our CFO since 2011. In the past 9 years, he made significant contribution to our transformation from the private health company into the public-listed company. We have helped the company build a solid finance team with effective internal control systems since our IPO. On behalf of all of us at Vipshop, I would like to thank Donghao for his leadership, professionalism and strong work ethic. I wish him the best of luck with his future endeavors. We have already started the search process for a new CFO.

Thanks, Eric, and hello, everyone.

As Eric noted, I will be stepping down from the CFO position in November for personal reasons, after we report results for the third quarter. I would like to open up by saying that it has truly been an honor to be able to serve as Vipshop's CFO and grow with the company in the past 9 years. I have made many trusted friends along the way and will always cherish the experience we had together. I would like to thank Eric, Arthur and other colleagues for their support and friendship along this journey. I look forward to continuing to serve the company in the capacity of a non-Executive Director of the Board. I trust that the company is well positioned to further fortify its leading position in China's discount retail market and have full confidence in Eric, Arthur and the team to continue to deliver outstanding results going forward.

Turning to our results for the second quarter of 2020. We delivered solid top line growth coupled with year-over-year improvement in profitability this quarter. Specifically, non-GAAP net income attributable to Vipshop shareholders increased by 24.3% year-over-year to CNY 1.3 billion from CNY 1.1 billion in the prior year period. Our non-GAAP net margin attributable to Vipshop shareholders increased to 5.5% from 4.7% in the prior year period, despite aggressive reinvestment in coupons and marketing expenses related to this year's June promotional campaign.

We were able to achieve these solid results because of our focus on optimizing our product assortment and providing our customers with superior customer experience. In the second quarter, GMV contribution from apparel-related categories increased to 69% from 63% in the prior year period and GMV contribution from our Fengqiang and Kuaiqiang channels reached 50% of our online GMV.

Going forward, we will continue to balance our top line growth and profitability, aiming to grow as fast as possible while keeping our margins at a healthy level. We're confident that as China's leading discount retailer, we can continue to expand our market share and generate sustainable value creation for all of our shareholders.

Now moving on to our quarterly financial highlights. Before I get started, I would like to clarify that all the financial numbers presented today are in renminbi amounts and all the percentage changes refer to year-over-year changes unless otherwise noted.

Total net revenue for the second quarter of 2020 increased by 6% year-over-year to CNY 24.1 billion from CNY 22.7 billion in the prior year period, primarily driven by the growth in the number of total active customers. Gross profit for the second quarter of 2020 was CNY 4.9 billion as compared with CNY 5.1 billion in the prior year period. Gross margin was 20.5% as compared with 22.4% in the prior year period, primarily attributable to our strategy to reinvest into discounts and coupons during this year's June promotional event.

Total operating expenses for the second quarter of 2020 decreased to CNY 3.8 billion from CNY 4.2 billion in the prior year period. As a percentage of total net revenue, total operating expenses decreased to 15.8% from 18.5% in the prior year period.

Fulfillment expenses for the second quarter of 2020 decreased to CNY 1.7 billion from CNY 2.2 billion in the prior year period. As a percentage of total net revenue, fulfillment expenses decreased to 7% from 9.7% in the prior year period, primarily attributable to the change in fulfillment logistics arrangement.

Marketing expenses for the second quarter of 2020 were CNY 1 billion as compared with CNY 877.6 million in the prior year period. As a percentage of total net revenue, marketing expenses were 4.3% as compared with 3.9% in the prior year period.

Technology and content expenses for the second quarter of 2020 decreased to CNY 305.4 million from CNY 422.3 million in the prior year period. As a percentage of total net revenue, technology and content expenses decreased to 1.3% from 1.9% in the prior year period.

General and administrative expenses for the second quarter of 2020 were CNY 804.6 million as compared with CNY 706.3 million in the prior year period. As a percentage of total net revenue, general and administrative expenses were 3.3% as compared with 3.1% in the prior year period.

Our income from operations for the second quarter of 2020 increased by 28.4% year-over-year to CNY 1.2 billion from CNY 965.4 million in the prior year period. Operating margin increased to 5.1% from 4.2% in the prior year period.

Non-GAAP income from operations, which excluded share-based compensation expenses and amortization of intangible assets resulting from business acquisitions, increased by 27.1% year-over-year to CNY 1.5 billion from CNY 1.2 billion in the prior year period. Non-GAAP operating income margin increased to 6.2% from 5.2% in the prior year period.

Our net income attributable to Vipshop shareholders for the second quarter of 2020 increased by 88.9% year-over-year to CNY 1.5 billion from CNY 813.5 million in the prior year period. Net margin attributable to Vipshop shareholders increased to 6.4% from 3.6% in the prior year period. Net income attributable to Vipshop shareholders per diluted ADS increased to RMB 2.24 from RMB 1.21 in the prior year period.

Non-GAAP net income attributable to Vipshop shareholders, which excluded share-based compensation expenses, amortization of intangible assets resulting from business acquisitions, tax effect of amortization of intangible assets resulting from business acquisitions, investment gain and revaluation of investments excluding dividends, tax effect of investment gain and revaluation of investments excluding dividends, and share of loss in the investment of limited partnership that is accounted for as an equity method investee, increased by 24.3% to CNY 1.3 billion from CNY 1.1 billion in the prior year period. Non-GAAP net margin attributable to Vipshop shareholders increased to 5.5% from 4.7% in the prior year period. Non-GAAP net income attributable to Vipshop shareholders per diluted ADS increased to RMB 1.92 from RMB 1.58 in the prior year period.

As of June 30, 2020, our company had cash and cash equivalents and restricted cash of CNY 8.1 billion and short-term investments of CNY 5.9 billion. From the second quarter of 2020, net cash from operating activities was CNY 5.1 billion.

Looking at our business outlook. For the third quarter of 2020, we expect our total net revenue to be between RMB 20.6 billion and RMB 21.6 billion, representing a year-over-year growth rate of approximately 5% to 10%. These forecasts reflect our current and preliminary view on the market and operational conditions, which is subject to change.

With that, I would now like to open the call for Q&A.

(Operator Instructions) We have the first question coming from Alicia Yap from Citigroup.

Thank you, Donghao, for your service and best wishes to you. So my question is related to the sell-through rate. So I think, remember, in the past, management noted that the sell-through rate for most of the flash sales merchandise is about 50%. So I wonder if there has been any change on the sell-through rate now. Any different by the product category? Can you also remind us the rough percentage of your merchandise that are currently store or utilize our warehouse versus those that you have to ship back to the suppliers after the sales end?

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[Interpreted] So Alicia, we no longer actually track the sell-through rate as closely given that we are largely connected with the inventory systems of that of our suppliers. And our logistics model has changed from before the fact that's being tapped out to JIT and JITX. So the just-in-time model and the single supplier order shipping directly from the supplier's warehouse to the end consumer model. And therefore, except for the products that we purchased outright, we no longer have the concept of sell-through rate.

And then regarding your question on passing that, that's a very small percentage because the majority of our products are now in JIT and JITX.

We have the next question coming from the line of Thomas Chong from Jefferies.

I have a question about the business trend in the month of July and August. Can you comment about how the GMV is trending and our expectations in terms of the user and the GMV in the second half? We noted that in Q2, the quarterly net adds is quite solid. Just want to see how we should think about the second half outlook. And then a very quick question is about the competitive landscape and our thoughts on live streaming online shopping.

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[Interpreted] So Thomas, after COVID-19 impact, we still saw quite positive trends in July and August given that more people are moving online to make their purchases as opposed to before, therefore, we've seen quite positive trends. But the third quarter is traditionally a light season without promotional events and is also a light season for the apparel category. We have higher and better expectations for the fourth quarter where apparel ticket sizes are much larger, ticket sizes as well as the promotional events in the fourth quarter that we will run as well as industry-wide promotional events to gain market share. So we are quite positive about the second half outlook. (foreign language)

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[Interpreted] So Thomas, regarding your second question on competition and our views on live streaming, after the COVID-19 outbreak, there is a lot more inventory in the market as compared to before and a lot of brands are looking to expand channels, including brands that didn't work with us that are now working with us. So the key is which channels can monetize the inventory for the brands more efficiently. And therefore, we will also be executing on our merchandising strategy to gain share. Regarding your question on live streaming, we've tried live streaming e-commerce for about 4 months now. We've seen some positive trends. But we are still in the early stage to explore this concept, and we will continue to explore different formats, for example, short videos and live streaming.

We have the next question coming from the line of Binnie Wong from HSBC.

Donghao, so sorry to see you go. It has been a great pleasure to work with you for all these years. So the question here is that, if you look at the gross margin, it seems to be slightly lower on a Y-on-Y basis, about 2 bps -- 2 points lower. I'm just wondering, any category mix change? And then if you look at the marketing cost ratio, it seems to be quite high since -- basically higher since 3Q '18 to around like 4% or so. So how do we see the full year sales and marketing cost ratio should trend? And then if we can understand better in terms of sales and marketing, how much of that is related more as to user acquisition? How much is it related to couponing? That will be great.

Okay. Well, thanks, Binnie. Yes, you're right. I mean I've been with the company for 9 years, and I really love this company. But I think it's hardly the right time for me to move on. But as I will be stepping down as the CFO of the company, I think at the same time, I will be appointed as a new non-Executive Board Director. And in that capacity, I will still be doing my best to try to contribute to the prosperity and growth of Vipshop. So no need to worry about that.

So back to your question about the business. So gross margin, yes, you're right. On year-over-year basis, gross margin for Q2 was like about 2 percentage points lower than Q2 last year. And the reason we have that is because, if you look at our operating expenses, total operating expenses as a percent of revenue, it was down by 2.7% compared to Q2 last year. So our strategy is to try to grow the company as fast as possible while maintaining a healthy margin level. So while we are -- so now that we are able to save costs and drive down the operating expenses as a percent of revenue, we want to use some of that savings to reinvest in the top line growth of the company. So one of the things that we did was to offer more coupons, rebate and discounts to our customers to drive: first, top line growth; and second, new customer and total customer growth. So if you look at our customer growth in the past Q2 this year, it was like 70% year-over-year, which was quite impressive.

And marketing, yes, you're right. Marketing expenses as a percent of revenue went up slightly in Q2, partly because in Q1 due to the coronavirus pandemic crisis, we made a decision not to spend too much on marketing. But since early May, we saw the market was quickly recovering. The demand was coming back very fast. So you're totally right, it's probably the time for us to spend on marketing again to drive our traffic, our customer growth, and eventually, top line growth. For this whole year, we do not expect the marketing expenses as a percent of revenue to be significantly higher than last year. It will probably be slightly higher but not significantly higher. Again, so the strategy -- overall strategy is to grow as fast as possible while maintaining a healthy margin level.

And as for last bit, our marketing expenses are all on customer acquisitions where the coupons and the discounts are accounted for in our gross margins. So it's separate.

So is that the reason also why gross margin has been trending down a bit because that we have also been giving out more coupons? Or is it by any reason for category mix?

For what? I'm sorry, Binnie.

Yes. Sorry, sorry. Donghao, sorry I was just thinking that, is that also the gross margin trending down, like, around 2 percentage points lower than last year? Is it also because of like the coupons? Or is it because of category mix change?

What change? Oh, category change. All right. Okay. So for this past Q1, I think the main reason for the decline for gross margin was a change in our category mix. But for Q2, I think it was mostly because of our reinvestment efforts to provide more coupons and discounts to our customers.

We have the next question from the line of Joyce Ju from Bank of America.

Congrats on the solid result this quarter. And Donghao, thanks for all your, like, efforts and help. Yes, my question is actually regarding the user growth and also the sales and marketing. For the user growth this quarter, we have seen -- if the user growth actually reaccelerate from the 1Q and the growth rate is actually similar to the second half last year. Just want to just make sure the company will continue to invest in this front. And should we expect a user growth like similar to this quarter's growth rate? But we know this quarter, we have like big promotions and industry-wise, maybe the user growth seems like all pretty strong. Should we expect a seasonality in user growth as well or we believe this will be more consistent? And the second question is, we're currently actually seeing the e-shops doing a lot of like branding, branding marketing like advertising on like Hunan TV or like sponsor a lot of TV shows. May we have a breakdown for our sales and marketing? Like what percentage of them are actually doing the branding? What percentage of them is actually using online acquisition for traffic? Yes, that's all.

Thanks, Joyce. (foreign language)

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[Interpreted] So Joyce, regarding your question on the customer growth, we actually started to invest in marketing again towards the end of April, because before April, due to the pandemic, we were quite cautious about investing into marketing. And after the situation has come, in late April and early May, we started to invest heavily into both TV show endorsement as well as digital advertising because people were staying home a lot, watching TV, on the iPad, we've seen quite positive results from the TV show endorsements as well. We actually saw pretty solid results in terms of both new customer acquisitions as well as spending money in reactivating what we call old, old customers. So people who've shopped with us a long time ago that haven't really shopped with us in a while. And we've seen positive trends in both. In the back half, we will continue to invest into marketing, and we expect the customer growth trends to be positive going forward as well. (foreign language)

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[Interpreted] Joyce, regarding your second question on the division between targeted advertising and branding, if we were spending $3, then $2 of them will be spent on digital advertising, so very targeted. And then about $1 will be spent in terms of branding. The branding results show up slower, not as immediate, but we do see that it does remind a lot of new customers who download our app as well as old customers to revisit our platform. So we are actually quite happy with the distribution between the marketing budget right now.

We have the next question coming from the line of Eddy Wang from Morgan Stanley.

Best wish to Donghao. So my question is about the brand inventory level. So as I think you mentioned last time that you expected the inventory issue of brands to sustain through the end of this year. But if you look at the June and the July, the prior demand in China is actually quite strong. And we all understand that lots of platform, including us, we are actually doing quite aggressive promotion during the June 18 period. So I just want to understand that your view on the inventory issue pertain to the end of this year, is there any change in the view or you still kind of hold this view?

Thanks, Eddy. (foreign language)

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[Interpreted] Eddy, We are still seeing high inventory levels in the market as a lot of brands are coming to us to monetize on their asset inventory. So we believe that this trend will continue into the second half of this year and into next year. For example, before, we did not clear inventory that's over 2 years for our suppliers. But now that we've opened a inventory clearance channel on our platform to help our suppliers clear the older inventory as well, so we do believe that there's plenty of inventory in the market for us to clear in the coming years.

The next question comes from Han Joon Kim from Macquarie.

Can management just kind of help us understand perhaps the TAM for our business? And this is asked within the context of recognizing that if we -- within discount and retailing, I think our vip.com kind of tends to focus a little bit more on premium mass segmentation, our kind of Shan initiative, where we'll focus a little bit higher than that, and Vipmaxx, a little bit lower than that. But the bulk of what I think investors or shareholders of Vip kind of get to see and monitor is really the premium mass segment or yes, the premium mass segment effectively. So just trying -- as we grow our user base, I don't know how you guys think about what the right number long-term might be for you guys in terms of active user base.

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[Interpreted] So Han Joon, we are a discount retailer and a lot of customers actually do like to buy things on discount, and therefore, we believe that our customer base can be very wide. On a large picture, we believe that our addressable market can be as high as 800 million customers.

Yes. And to add to that, we're not just any discount retailer, we are a discount retailer as a brand. So this is what's unique about our business model. So we sell branded products at deep discounts to our customers. And the size of the channel for our business, we believe, is very, very high. But it's hard to imagine why anyone just wouldn't like to have a branded product with deep discount. So it's -- we think that the TAM is going to be really big. And also, if you look at the largest discount retailer in the world, TJX, for the North American market, the total population is over like 300 million, like 1/4 of the population size of China, but they do like 5 -- $40 billion of sales a year. And we at Vipshop this year, we only do like 1/3, like around 1/3 of that. So the growth potential for our business model and for Vipshop, I think, is so huge.

We have the next question coming from Jerry Liu from UBS.

Donghao, all the best in the future. I would like to go back to some of the earlier questions about competition. And my main question is, if we look at June, roughly, maybe June, July, May as well, when demand has started to recover, in this period, what does competition look like? Were there any areas that surprised to the more positive or more negatively, particularly promotions during the 6/18 shopping festival? Was that more intense or expected or less intense than you thought? And given all that, what should we expect for a 11/11 shopping festival this year?

Thank you, Jerry. (foreign language)

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[Interpreted] So Jerry, regarding competition, we always see competition everywhere. It's always been quite fierce in the e-commerce space, and there's always more players entering. But we do believe that the market is big enough and continues to grow. And therefore, the key is to -- for the different platforms to execute on their strategy and gain share and gain customers from their strategy and execution. So from that perspective, it's not just May to July, but rather that for the rest of this year and beyond, we expect different platforms to continue to find different ways to sell more products and gain more customers. And we, of course, will continue to actively work with our suppliers to monetize -- help them monetize their inventory and execute on our merchandising strategy.

We have the next question coming from the line of Veronica Shen from China Renaissance.

All the best to Donghao. Well, my question is regarding the just ticket size, the order size. Since we have lowered the preshipping threshold for more than half a year, how should we anticipate our order size going forward? Will it stabilize at a certain level? Or if you have a downtrend cash rate?

I'm sorry. Are you talking about the CNY 88 free shipping?

Yes, yes, yes. And I'm thinking about the order side of things. We have lowered the free shipping strategy to CNY 88 from CNY 288. So I'm thinking about how should we anticipate the order size going forward.

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[Interpreted] Veronica, after we've announced the lower free shipping threshold to RMB 88, ticket size came down slightly, but also, customers are buying more frequently. In the first quarter, the ARPU and ticket size trends were clouded by the COVID-19 impact. But since the second quarter, we've seen healthy trends as we've acquired a lot of new customers as well as reactivated a lot of what we call old, old customers, they shop less frequently and buy less than very loyal existing customers. And therefore, they dragged down the average ARPU. But in the second half, we believe that we can continue to increase these customer shopping frequency and increase ARPU over time as well.

We have the next question coming from the line of Alex Yao.

Donghao, best wishes to your next journey. I have a question regarding the user growth trends. What drove the 17% year-on-year growth of active customers? And what's your user acquisition strategy into second half? What are the financial investment you need to prepare for the new user growth in second half?

Thank you, Alex. (foreign language)

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[Interpreted] So Alex, regarding user acquisition, in the second half, we will continue to increase marketing expenses as compared to the first half. In the second quarter, we've only actually invested into marketing expenses in May and June and did not invest in April. But we still see very positive user growth trends, and therefore, we do expect that the second half trend should be better than what we see right now given that our new customers actually decreased year-over-year in April.

We have the next question coming from the line of Hans Chung from KeyBanc Capital Markets.

My best wish to Donghao. So my first question would be, I just want to follow-up on the gross margin. So obviously, we have assigned promotion coupons and stuff this -- in the second quarter. And then I just wonder, how should we think about the second half, especially the fourth quarter? Should we think about the promotion activity will be even stronger than second quarter? And then second question would be a broader -- a broad question about the longer-term outlook. So can management share your view on medium-term growth outlook, for example, like say, 2 to 3 years? Are we able to get back to the double-digit CAGR while continue to maintain a stable margin for even better margin profile? And to achieve that, what kind of strategy we need to do? And then just hope to hear some thoughts from the management team.

All right. Well, thanks for the question. Well, as we said earlier, our overall strategy is to grow our business as fast as possible while maintaining a healthy margin level. So while we do not provide any guidance for our Q3, Q4 -- for gross margin, but what I can tell you is, as we continue to be able to save on operating expenses, such as fulfillment costs, we will be able -- we will be having room to provide more discount coupons to drive top line growth and customer user growth. So that is our strategy. And 2 to 3 years forecast, well, we -- of course, we will be doing our best to drive our top line growth as fast as possible. And obviously, we will be very happy to see if we can have like the double-digit growth, as you mentioned. But again, we do not provide guidance for top line growth beyond the next quarter, but we will do our best to achieve the fastest possible top line growth.

We have our next question coming from the line of Tian Hou from T.H. Capital.

Best wishes to Donghao. So the question is on the product category mixture. So we started just focusing on apparels. So I wonder what's the current product mixture? And going forward, what are some other categories that management wants to add more weight to our product portfolio? So that's the #1 question. #2 is regarding our technology and content expense. I see that item as a percentage of revenue is coming down. I wonder, going forward, how this line is going to look like.

Thank you, Tian. (foreign language)

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[Interpreted] So regarding your first question, Tian, our core capability lies in the wearable apparel-related categories, which contribute to over 70% of our GMV. And that's where our expertise is, especially in the merchandising side. Therefore, we will continue to expand our market share and grow our share in these core categories. We are not looking to enter any new categories aggressively at the moment as we believe there is plenty of market share to gain and plenty to grow in the apparel category. (foreign language)

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[Interpreted] Regarding technology expenses, we expect it to be rather stable going forward as we have a very mature setup already and we're investing incrementally a little more into personalization. But if technology expenses increases in the future, it would not be meaningful. It will be a very slight increase.

We have the next one coming from the line of John Choi from Daiwa.

All the best wishes for you, Donghao. My first question is just quickly on your new user acquisition. I think can you kind of, management, give us color about the kind of the breakdown between lower tier cities? And also, if you could share with us some metrics for the past, I would say, couple of quarters of the user spending behavior of these new users, including the old users that you mentioned. Are you seeing a nice gradual increase of the average spending? And my second question is just a quick follow-up. I think on the prepared remarks, you guys mentioned that Fengqiang and Kuaiqiang now 50% of your overall GMV. As this continues to grow, how would this impact our gross margin?

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[Interpreted] So our new customers come from across the board. But lately, we've noticed that slightly more come from Tier 4, Tier 5 and Tier 6 cities. And these customers are also younger on average, a lot of post-'90s and post-2000. (foreign language)

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[Interpreted] Regarding the ARPU trends for new customers, it's always been the case that when new customers first come in, they will not spend a lot. But as they become more active and stickier to the platform, their ticket sizes and their shopping frequency will also improve. So we continue to see these healthy trends. (foreign language)

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[Interpreted] And the last question, to answer your question regarding Fengqiang and Kuaiqiang. These channels will not impact our gross margins. We plan our gross margin as a whole, and Fengqiang and Kuaiqiang are not especially a margin drag as compared to other platforms.

Yes. And I just want to add to that, Fengqiang and Kuaiqiang, the prices are really cheap, but our take rate will not -- aren't very much different from other channels. So it won't be too much -- it won't be a drag on our gross margin.

I would now like to hand the conference back to our hosts.

Thank you all for taking the time to join us today, and we look forward to speaking with you next quarter. So please keep in mind next quarter, it will still be me. Thank you. Bye-bye.

Thank you. Ladies and gentlemen, that concludes our conference call for today. Thank you all for your participation. You may disconnect your lines. Thank you to all.