Cardlytics, Inc. (CDLX) Q1 2018 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and thank you for your patience. You’ve joined Cardlytics’ First Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will be given at that time. [Operator Instructions] And as a reminder, this conference may be recorded. I would now like to turn the call over to your host, CMO, Miss. Dani Cushion. Ma’am, you may begin.

Good afternoon, and welcome to Cardlytics first quarter financial results call. Before we begin, let me remind everyone that today’s discussion will contain forward-looking statements based on our current assumptions, expectations and beliefs, including projected 2018 second quarter and full year financial results and operating metrics, business strategies and other forward-looking topics such as anticipated growth in direct with expanded credit card purchases, and new and existing customers, including those from JP Morgan Chase and Wells Fargo, growth in average monthly average users and in new verticals, including travel, entertainment, grocery and premium brands, expanding advertising budgets, developments in open banking and associated partnerships, improving marketer adoption and customer engagement, and anticipated investments in sales and marketing and R&D to create future products, expand the capacity of our analytics infrastructure to provide richer analytic insights, and validation of campaign performance. For a discussion of the specific risk factors that could cause our actual results to differ materially from today’s discussion, please refer to the Risk Factors section of the company’s 10-K, filed March 19, 2018, and in subsequent periodic reports that the company files with the Securities and Exchange Commission. Also during this call, we’ll discuss non-GAAP measures of our performance. GAAP financial reconciliations and supplemental financial information, are provided in the press release issued today and the 8-K filed with the SEC. Today’s call is available via webcast and a replay will be available for two weeks. You can find all of the information I’ve just described on the Investor Relations section of Cardlytics’ website. Joining us on the call today are Cardlytics leadership team, including CEO and Co-Founder, Scott Grimes; COO and Co-Founder, Lynne Laube and CFO, David Evans. Following their prepared remarks, we’ll open the call to your questions. With that, let me turn the call over to Scott Grimes, Cardlytics’ CEO and Co-Founder. Scott?

Thanks, Dani, and thank you to everyone for joining today’s call. Q1 was a busy quarter. In addition to taking the company public, the team delivered solid results. On today's call, we’ll discuss our first quarter 2018 results and our plans for the remainder of 2018. Total revenue for the quarter was $32.7 million. Our core product, Cardlytics Direct, grew 31% year over year to $32.1 million. In addition to continued growth of monthly active users, and expansion of our base of advertisers and verticals, Q1 also benefited from some of our advertisers launching campaigns ahead of schedule, pulling forward revenue from Q2. David will discuss details around FI MAU growth, adjusted EBITDA and all other financial metrics later in his prepared remarks. Now, I'd like to share an important new business development for Cardlytics. As you may have seen on Tuesday, we filed an 8-K with the SEC announcing the signing of an agreement for a national launch with JP Morgan Chase. Cardlytics Direct will be delivered through Chase's state of the art digital channels to provide real value to their customers and to drive usage of Chase's payment products. A year in 2017, Chase had 97 million debit and credit accounts, and $917 billion in combined debit and credit card spend. While rollout details are still being finalized, we expect to work with a substantial number of card accounts in Chase's portfolio, which will represent a significant addition to the $1.3 trillion of spend and $18 billion annual purchases we processed in the US today. The addition of Chase to the Cardlytics purchase intelligence platform, will further strengthen our ability to provide powerful, actionable insights for our marketers via Cardlytics Direct. Again, this is a significant milestone for us as a company, and we believe it positions us well to consolidate the purchase intelligent market for US banking. Lynne and I are incredibly proud of the team, and of all the hard work that has gone into making this deal a reality. creating our: Second, we are increasing our sales and marketing resources to secure and service marketers in important new verticals, including grocery, travel, entertainment and premium retail brands. We're also staffing to support increased spending for marketers in existing verticals. Finally, we have reassigned most of our US resources, focused on platform solutions to support the growth of Cardlytics Direct. As we’ve discussed before, platform solutions serves as a test bed where we explore how purchase based analytics can solve problems outside of our own native bank channel. We continue to be really excited about the market needs we can serve with other platform solutions, and we believe that we will be even better positioned to create impactful new solutions based on purchase intelligence after completing our current bank implementations. In Europe, the introduction of open banking is creating interesting new opportunities to leverage our platform. By working with non-bank partners with large loyalty programs, we can leverage purchase intelligence to bring marketing in the form of an additional rewards proposition to the partners’ customers through their proprietary digital channels. In the future, we will speak to some our early partnerships in the opportunity we see. David will provide more color on other platform solutions in 2018 in his remarks. I’ll now hand the call over to Lynne to highlight some accomplishments from Q1, and to discuss how the organization is preparing to support marketing and bank partners over the next few years. Lynne?

Thanks. As Scott mentioned, we're excited to announce our upcoming launch with Chase, and we're pleased with our continued progress with Wells Fargo. We expect significant growth in MAUs and have recently made organizational changes to support the growth, which I will discuss. Over the past few years, our emphasis has been on expanding the value of our existing partnerships as evidenced by this quarter's strong growth. And while we’ll continue to grow value through our existing network, over the next few years, we’re placing more emphasis on launching new bank MAUs and adding to our existing bank of marketers as we build scale in important new verticals. Our existing bank of marketers includes restaurants, retailers and subscription service providers. In these verticals, we’ll work closely with our marketing partners to grow budgets as we scale MAU. As our marketing partners increase their commitments with us, they also expect a greater level of service from our account managers, and richer insights from our analytics teams. We have found that meeting these needs is powerful since it makes us more strategic and critical to our marketing partners, and we will invest to support growth. As our marketing partners invest more in Cardlytics Direct, they also require more rigorous, independent validation of our campaign results. We are investing in automation and partnerships to deliver this validation as we scale the business. Importantly, as digital media is under more pressure to prove return on ad spend and to protect privacy, we are well positioned as a premier channel. Cardlytics Direct delivers valuable customers and profitable incremental sales based on actual spend, while protecting the customer privacy in a bank environment designed to be highly secure. With significant new scale and much greater penetration of the credit card purchases coming into our platform, we can increasingly provide real value to marketers in the travel, entertainment, grocery and premium brand vertical. Securing partners in these verticals opens significant new budget opportunities. These brands also create offers that accelerate customer engagement with the program. We are actively standing up new sales teams and developing new marketing products to serve leading marketers in each of these verticals. While we will see growth coming from new marketers leveraging our platform, we continue to see growth in existing clients as well. In Q1 for example, we renewed an annual contract with a major mass retailer. Based upon the success of the program with them in 2017, they expanded their deal with us to include additional budgets from two other divisions, including their in-house (indiscernible). A major online travel company has already doubled their spend with us year over year so they can focus on (indiscernible) customers. Our purchase based insights and scale helped them drive efficient, repeatable incremental results. As a result of their successful Q1 campaign, we’ve already expanded budgets with this marketer for Q2 through Q4 this year. staff: We continue to make progress growing value from our existing bank partners. For example, in Q1, a top five national bank on our platform, rolled out a gamification program designed to increase engagement and encourage repeat use of Cardlytics Direct. They supported the launch with email, video and mobile takeovers. The initial tests were a success and new markets have already been launched in Q2. Another top 10 bank on our platform recently launched an activatable email product to expand the reach of our program beyond their online banking and mobile channels. The technology delivers targeted offers from our tech stack to the bank’s tech stack within half a millisecond, to hundreds of thousands of customers in the form of a highly customized email. We've seen excellent early results, and a regular schedule of emails is already in place for the remainder of the year. Finally, one of our UK banks recently adopted our best in class mobile widgets, which brings offers front and center for their customers when they’re accessing their bank’s mobile app. Across the board, we continue to work very closely with all our existing bank partners to enhance and growth the value of their programs with their customers, which in turn helps overall platform performance. Now I’ll turn the call over to David to walk you through our first quarter as a public company.

Thanks, Lynne. For the first quarter, total revenue was $32.7 million, representing an increase of 22% over the first quarter of 2017. Revenue within our core direct business was $32.1 million, representing 31% growth over Q1 2017. As you know, we have several important drivers impacting revenue growth. These include MAU growth, growth in new and existing advertisers, and improved engagement enhancements with our banks. MAUs grew modestly 13% over the first quarter of 2017 to $58.7 million. As Lynne mentioned, we continue to make significant progress with our existing banks in engagement enhancements, and we continue to gain traction with new advertisers. We saw progress from our growing and existing clients’ budgets as well. Our first quarter 2018 ARPU was $0.55, up 17% versus $0.47 in the first quarter of 2017, reflecting continued strength in our advertiser base. As I discussed with you on our last earnings call, while we generally know our advertisers’ annual budgets, which translates into fairly good visibility around the full year revenue, exact dates and timing related to the launch of the ad campaigns can shift. Consistent with that messaging, our first quarter revenue benefited from greater than anticipated pull forward of campaign activity in the second quarter into Q1. This pull forward of campaign activity from Q2 into Q1, is reflected in our second quarter guidance. Our annual revenue guidance for our core direct business remains unchanged, and is consistent with our prior expectations. As for other platform solutions, and as Scott mentioned previously, we are significantly reducing our investments in this endeavor in the short term, and therefore do not expect any meaningful contribution from this business for the remainder of 2018. I will discuss our guidance in more detail in a moment. Adjusted contribution profit, which we define as GAAP revenue minus revenue share, data and other third party data costs, was $14.2 million in the first quarter, compared to $10.6 million in the first quarter of 2017. Adjusted EBITDA was a $3.1 million loss in the first quarter of 2018, compared to a $4.9 million loss in the prior year period, as evidenced by strong year over year revenue growth and additional scale in the business. Adjusted EBITDA ad adjusted contribution profit excludes $2.5 million of noncash warrant expense we recognized in Q1. We ended the quarter with $89.8 million in cash, including proceeds from our IPO completed in February, compared with $24.4 million at year end 20179, and $4.9 million in availability from our AR facility. With the announcement that Chase will be coming on to the Cardlytics platform, we are very excited about the longer term prospects for the business, and would expect significant growth in MAUs when we launch. Furthermore, and consistent with our messaging from the roadshow, we have already started planning for the necessary investments across the organization in preparation for this momentous launch. For the remainder of 2018, we expect to make investments across sales, marketing, R&D and implementations in the amount of $14 million to $15 million across both OpEx and CapEx. In anticipation of bank launches, we will set up hosting environments, position new sales professionals in the field, and deploy best in class technology for the largest and most respected banks in the world. As Scott mentioned earlier, we’ll partially offset some of these costs by redeploying resources that previously were focused on other platform solutions. We would expect to repurpose around $2 million of resources through this process. It is important that we have best in class infrastructure in place, as well as a sales force that will now start the process of securing larger budgets from existing advertisers, and contracts with new advertisers. As for topline impacts, we settled on our agreement with Chase only recently, and it is therefore too early to conclude exactly what kind of topline impact, if any, they will have on the business in 2018. But to be clear, despite the typical uncertainty around bank launch timing, investors should understand we have begun selling existing and new advertisers for potential material growth in MAUs. It is important to know that our 2018 in guidance for core direct revenue remains unchanged. As Scott mentioned, we do not expect future material revenues from other platform solutions, as we are doubling down on our efforts to scale our direct product, and therefore expect 2018 total revenue to be between $153 million and $156 million. With the investments we expect to make this year, we expect a 2018 adjusted EBITDA loss to be between minus $16 million and minus $14 million. Adjusted EBITDA for the year exclude any accruals for FI share commitment shortfall, which we estimate to be roughly $2 million in the second half of 2018. Now turning to our second quarter guidance. There are a few factors to consider in our financial outlook. First, as I mentioned earlier, we experienced approximately $2 million worth of pull forward campaign activity into the first quarter from the second quarter. Second, we do not expect any material revenue contribution from other platform solutions. That being said, overall and importantly, we are on track to slightly above what we expected for the first half of 2018. Taking these two factors into account, we currently expect second quarter revenue to be between $34 million and $35 million. We expect an adjusted EBITDA loss for the second quarter to be between minus $4.2 million and minus $4 million. As Lynne mentioned, the Wells Fargo pilot continues to progress very nicely. We off to a great start for the year and feel encouraged by the progress we're making with our banks and marketing partners. With that said, I'll hand it back to Scott for his closing remarks before we open the call to your questions. Scott?

Thanks, David. In summary, we delivered solid first quarter results, with continued strong growth in our core direct business. The Chase agreement represents an exciting next step in the evolution of Cardlytics, adding significant scale to our Cardlytics Direct platform, and strengthening our ability to provide powerful, actionable insights for our clients. The momentum we experienced in 2017 continues to build in 2018, and we believe we are well positioned for sustained growth this year and beyond. We look forward to discussing our progress with some of you at the JP Morgan Conference next week, and with all of you in the next quarterly call. Thank you. With that, I will open up the call for your questions.

Thank you. [Operator Instructions] Our first question comes from the line of Douglas Anmuth of JP Morgan. Your line is open.

Thanks for taking the question. Can you just talk about, just in terms of Wells a little bit more around timing and how things are going here in the early stages and I guess, what your confidence is just as you would be doing two big rollouts, depending obviously on the timing for each of them and Chase in particular? If you could hit on those. Thank you.

Yes. Good afternoon, Doug. So as we've discussed before, we do not talk about the performance of individual banks. What we do is obviously really confidential. So we tend to focus on what's going on in the network overall. What I can say about Wells is we are very pleased with the results of the pilot. We’re doing early implementation work with them now and we will announce it when we hit the next milestone that's appropriate to announce. In terms of the second question you asked about our confidence in delivering two national banks, that's why - that’s where David emphasized that we're really doubling down on the investments that we are making in Cardlytics Direct. We want to and we're really focused in two vectors, making sure that we have the right sales presence in the market so that we can work with a broad group of advertisers to help them take advantage of substantially new sort of move the needle scale. And then also making sure that we have the right infrastructure in place so that we can process the significant amount of new data and new campaigns that we expect to be processing. In fact, we are scaling the technology infrastructure we have today where we're processing roughly $60 million MAUs. We're scaling it up to handle about 200 million MAUs, which represents a pretty material investment in our part.

Okay. Thank you, Scott.

Thank you. Our next question comes from Tim Willi of Wells Fargo. Your line is open.

Thanks and good afternoon. I had three questions here. The first one is maybe just a little bit of housekeeping or just a little bit of color. The MAU number sequentially, we had thought it might tick up a little bit. I know there's a tradeoff between ARPU with more season MAUs and growth of new MAUs that might bring you less ARPU so the revenue all sort of puts. But I'm just sort of curious if there was anything to think about from 4Q to 1Q, what that MAU number and how to interpret that I guess on a go forward basis.

Yes. Let me touch on it at a high level, and David, Lynne, you guys might add. One of the things - so MAU has seasonality actually very similar to what advertising does. People tend to go to banking a little more in the holiday season, probably because they’re worried about running out of money. They’re checking how much they have and you typically see an MAU drop in Q1, and then it starts to accelerate throughout the year. So I think what we actually observed in Q1 was a combination of the seasonal drop, plus some MAU growth on the mix. But there's also a certain level of noise around that. David?

I think that's right. I mean I think if anything, I think what the quarter represents is our ability to continue to drive meaningful revenue growth without necessarily having to have MAU growth. But I think the seasonality point is a fair one, but it's not necessarily anything that I would look too far into.

Yes, I agree with that.

Okay. No, that's great. I just wanted to make sure we understood the puts and takes, sir. Then the other questions I had, I guess going to some of the investments that you guys talked about in the prepared comments, just curious between the opening up and beginning to build out new categories for advertisers where you talk about travel, entertainment, grocery and then obviously the infrastructure investment for JP Morgan and prospective other banks. Is there a way to just sort of think about, as we look at the EBITDA guidance for 2018, just to conceptualize how those two different paths are contributing to expenses and then maybe one rolls off quicker than the other as we start to think about our 2019 models and just how to think about certain expenses beginning to dial back, while others may still be in place waiting for the JP Morgan ramp, if that makes sense.

Yes. This is David. I’ll touch on a couple of things with regard to that, Tim. So as you might imagine, from an investment perspective, we've had a little bit of time to put some planning into place. And I'll touch on topline in just a second. Certainly a lot of the things that we're going to be putting money into will be around sales and marketing, making sure we can go out, attack new verticals. Obviously with the Chase portfolio, we feel like we have a very opportunistic view towards new verticals and new ways to attack the markets. Obviously on the R&D side, implementation side, this is a major milestone for us and we're going to want to make sure we have the infrastructure in place. I think what I don't have as finer of a point around as I'd like at this point is just really the split between CapEx and OpEx. And I think that's what you see reflected in the adjusted EBITDA guidance. I think we talked about kind of a minus 11.5-ish number for the year. And so what you see is in addition of call it $3 million or $4 million of OpEx in that number. Obviously the stated number that you see in the 15 to 18 includes some FI share shortfall. So I know for the folks on the phone, we always kind of speak about adjusted EBITDA in two ways. So $2 million of that is that projected shortfall. The remainder is what we've added by way of OpEx in those areas that I mentioned. And then there will be some CapEx as it relates to hosting related, hardware and software related expenses. I don't know if that answered your question. But the one thing - the other thing that I also wanted to touch on just kind of while we're talking about it is as it relates to topline. Certainly on the topline, we just made this announcement a few days ago and I’ll let Scott touch on this as well. We’re going to literally start now going out and assessing what these opportunities look for as we plan for significant MAU growth in 2019. And so that's kind of why you see our view towards our core direct business, the guidance around that remaining unchanged. It’s certainly something that we're going to continue to assess. But we have had time to think about investments. We're starting the process to think about what it could mean for the topline. Scott?

Yes. Look, I would agree with all that. There's a couple of things we know. We know that our marketer partners want to buy scale, and that they focus on a relatively small number of digital marketing channels that can move - really move the needle. We can move a lot more needles than we could before. And so we're excited about our ability to go branding - way to bring a lot more customers into the store and be able to measure the penny to their investment. So we think this will be well received from our marketing partners. A second, while we are - have a modest kind of onetime increase in operating costs within the sales side and the R&D side, there are positions to scale the business with many, many more MAUs over multiple years. So I think we're really going to start to see the scale effect on the business as - and we’ve talked about this before, is we’re largely a fixed costs business with a much larger customer base. So I think as you think about modeling, I would think about okay, a little more fixed costs would dramatic increase it overall for the MAU scale.

Yes. No, that's great. I appreciate the color. I’ll just hop back in the queue. Thanks.

Thank you. Our next question comes from the line of Youssef Squali from SunTrust. Your line is open.

Hi. This is Sagar on for Youssef. My question revolves around, with data privacy coming under increased scrutiny domestically, and the rollout of GDPR in Europe in a few weeks, do you believe that there are any risks here from either regulators or from financial institutions more closely examine the relationships within your third parties? Or do you think that you’re generally unaffected by recent events?

Yes. This is Lynne. I’ll take the question. So as a reminder, one of the strengths of our platform is we built it to take into consideration the high regulatory and privacy concerns that banking has always had. And so it is - it's a huge strength of our platform. We don't have any personally identifiable information. We're well contained inside the bank’s secure digital channels. Our customers are all verified customers. There’s no opportunity for bots or any type of fraud from that sense. So we actually feel like this is a great opportunity for us as our marketers and advertisers are starting to question potentially some of the practices of other digital channels that are out there. We stand really strong in comparison. In terms of open banking and GDPR in Europe, we see that as a significant opportunity actually for us to - if you think about what we do, we are a platform that safely and securely can manage and process and monetize consumer transaction data. We do it for banks today. If in the future in Europe or anywhere else where open banking goes, if other players are holding consumer transaction data, we still are a platform that can safely and securely help them monetize that. And it's all we do and we're exceptional at it. So we're very bullish on the opportunity that some of the recent news stories has created for us.

Okay, thank you.

Thank you. Our next question comes from the line of Aaron Kessler of Raymond James. Your question please.

Hi guys. A couple of questions. maybe first on the JP Morgan deal, if you can talk a little bit about timing and how it came together I guess a little sooner than we expected in terms of many negotiations with them. And maybe two as the competitors there and how you’re thinking about kind of typically a business that’s a little more aligned to debit card. Obviously they have a large credit card portfolio as well. Thank you.

Yes. You want me to take it? Yes. The guys at JP Morgan Chase or the guys and girls over there are fantastic. And this deal certainly came together quite a bit faster than I think we've seen in the past. And so we were very pleased and very excited with that. They're just a really innovative organization. In terms of the question around debit and credit, you're absolutely correct. They have a massive credit card portfolio and it's one of the biggest investments that we're making in sales is to go penetrate new verticals where we're going to see a lot more transaction data than we have traditionally in the past, e-commerce, travel, luxury, et cetera. So we will be selling specifically for our new types of portfolios and credit focused portfolios with this implementation.

And then it's probably worth adding, a bunch of the innovation work we've done over the past two to three years has been to improve the performance of credit card portfolios. And I won't go to specifics, but compared to a few years ago, there are multiples better performance, things like our activatable email, our new sort of mobile media formats that we use. So we feel very good about our ability to unlock the value of a credit card customer today.

Great. And just to clarify on the guidance, share looks a bit slightly lower for the year. Is that all other platform solutions or any change kind of the direct business guidance?

Yes that's right. So we are unchanged from our guidance for our core business. What you see on total is the removal of other platforms.

And guys, to be very transparent, once we realize the task at hand and scale in Cardlytics Direct, the two things we really had to do is get people - salespeople that understood our business focused on that Cardlytics Direct and get our technical talent really focused and scaling the infrastructure of it. So it really was a decision we need to really double down our resources in Cardlytics Direct to be able to handle the MAU increase we see in 2019.

Got it. Okay, thank you.

Thank you. Our next question comes from the line of Andy Hargreaves of KeyBanc. Your line is open.

Yes. Wondering if the rollout here with both Chase and Wells should change our expectations for contribution margin longer term. And then just to clarify, I think I’m hearing you right. Basically we should be thinking other platforms solutions as no revenue, no contribution process on a go forward basis. Is that right?

Yes. On the second part of the question, that's correct. I think …

For 2018.

For 2018.

For 2018. Yes, sorry about that. For the first question, I think longer term, certainly we're not going to comment specifically to bank contracts that we enter into, but we believe this will not lead to any material changes to the network average for the longer term.

And Andy, we still have a lot of excitement around the platform solutions. And frankly, as we come out the other end of these implementations with a significant increase MAUs, we can solve a lot bigger problems. It’s just we had a near term, where do we assign our resources given the implementation work that's underway decision.

Yes. And then last, I’m sure you guys have plenty to do now for the foreseeable future. But wondering if you've had sort of similar breakthroughs in discussions with others other banks in the pipeline as you have with Chase.

We're always - I mean we're always out their talking to all of the big banks in the country. And as we said during the roadshow, we just don't comment on any particular bank until we have something material to say, because banks can - often they can go slower than we'd like them to. In some cases, they actually go faster. For sure, we know they're highly unpredictable. But you should rest assured that we're talking to every big bank out there. And as Scott has said, we are well positioned to consolidate the industry at this point.

Okay, thanks.

Thank you. Our next question comes from the line of Matt Trusz of Gabelli & Company. Your line is open.

Hi. Thanks for taking my questions. Do you have a sense of what the incremental lift is to ARPU from adding one of these new advertiser categories or verticals? And more generally, would you see the bigger ARPU opportunity as banks improving their user interface and practices and displaying more inventory just from you bringing on this broader universe of retailers? Thank you.

Hey Matt, you're right. It’s both, right? The - some of these categories like grocery for example, we do a lot of grocery in the UK. It contribute a lot of ARPU. Travel and entertainment, especially in the credit card, very large advertising budgets. So these are opportunities that we've always known that are out there, and we now have the scale coming to feel like that we can go and very profitably invest sales dollars to go and secure those advertisers kind of at scale. There's also some product enhancements we are in the process of developing to help us serve some of those verticals in a new way that could be really engaging to consumers. So for sure, bringing in new advertising verticals adds to ARPU, and we have no shortage of impression inventory within our banks. So we're excited about that. Your second point, the other big way we drive ARPU is continuing to roll out additional UI enhancements and customer experience enhancements off of our optimization in the banks. Lynne spoke to some of those in her examples. That's something we have a big team deployed on every single day, and there's a significant amount of headroom in that area.

Thank you.

Thank you. At this time, I'd like to turn the call back over to Scott Grimes for any closing remarks. Sir?

Well everybody, thanks for joining our call today. We had a really exciting quarter. On our IPO roadshow, we talked about how we're really excited about the potential to consolidate the US banking market. And over the past three months, I think we've really made a ton of progress solidifying that position. So we have a lot to look forward to going forward. We’re going to be at the JP Morgan Conference next week. I know a bunch of you will be there. We look forward to seeing you at the conference and thanks for joining today's call.

Thank you, sir. And thank you, ladies and gentlemen. This does conclude your conference. Thank you for your participation and have a wonderful day.