Neonode Inc. (NEON) Q1 2022 Earnings Report, Transcript and Summary

Hello, everyone. Thank you for standing by, and welcome to Neonode's First Quarter 2022 Earnings Conference Call. [Operator Instructions]. At this time, for opening remarks and introductions, I would like to turn the call over to Urban Forssell, Neonode's CEO. Urban, please go ahead and start the conference.

Welcome, and thank you for joining us. In today's call, we will review our first quarter 2022 financial results and provide a corporate update. Our update will include details about our business strategies, customer activities and other items of interest. Joining me on today's call is our CFO, Fredrik Nihlen. Fredrik will present the financial results of the company for the first quarter of 2022. After this, I will come back and comment on overall strategies, customer activities and other operational topics. Before we proceed with the main part of the presentation, I'd like to read the following legal disclaimer. This presentation contains and the related oral and written statements on Neonode Inc. and its management may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include information about current expectations, strategy, plans, potential financial performance or future events. They may also include statements about market opportunity and sales growth, financial results, use of cash, product development and introductions, regulatory matters and sales efforts. Forward-looking statements are based on assumptions, expectations, information available to the company and its management, and involve a number of known and unknown risks, uncertainties and other factors that may cause the company's actual results, levels of activity, performance or achievements to be materially different from any expressed or implied by these forward-looking statements. These uncertainties and risks include, but not limited to: our ability to secure financing we needed on acceptable terms; risks related to new product development; our ability to protect our intellectual property; our ability to compete; general economic conditions, including, as a result of the ongoing COVID-19 pandemic or geopolitical conflict such as the war in Ukraine; as well as other risks outlined in the filings of the company with the U.S. Securities and Exchange Commission, the SEC, under the Securities Exchange Act of 1934 as amended including the sections entitled risk factors and management discussion and analysis of financial condition and results of operations. Prospective investors are advised to carefully consider these various risks, uncertainties and other factors. Any forward-looking statements included in this presentation are made as of today's date. The company and its management undertakes no duty to update or revise forward-looking statements. This presentation has been prepared by the company based on its own information as well as information from public sources. Certain of the information contained herein may be derived from information provided by industry sources. The company believes such information is accurate and that the sources from which it has been obtained are reliable. However, the company has not independently verified such information and cannot guarantee the accuracy of such information. Thank you. At this point, I would like to turn the call over to Fredrik, who will review the financial results for the first quarter. Fredrik, please go ahead.

Thank you, Urban. You can find our first quarter 2022 earnings and 10-Q with the details of financial performance during the first quarter of 2022 available for download from the Investors section on our website, neonode.com. In the interest of time, I will only summarize the key comments here. Our total revenues for the first quarter of 2022 reached $1.3 million. That is a decrease of 21% compared to the same period in 2021. License revenues for the first quarter of 2022 was $1.1 million compared to $1.3 million for the same period in 2021. The decrease is primarily the result of component shortages within the printer and automotive markets related to the COVID-19 pandemic, which, in turn, impacted our license revenues for the first quarter of 2022. Product revenues for the first quarter 2022 was $147,000, an increase of 20% compared to the previous quarter. In the first half of 2021, we saw an increase in the product sales. In the second half of 2021 and continuing into the first quarter 2022, our sales were negatively impacted due to COVID-19-driven lockdowns in Asia. Our elevator and kiosks customers in Asia have been first adopters of our contactless touch technology and as expected, most of our initial TSM sales are related to retrofit solutions technology and are more limited. New customer equipment launches can take 6 to 18 months or even longer before a customer is ready to begin mass production. Our gross margin of products were 65% for the first quarter of 2022, which is an increase of 41 percentage points compared to the same period last year. If we look at the gross profit and gross margin only for TSMs and adjust for the onetime effects, we can see a positive trend for the gross margin with 62% from the first quarter of 2022. Long term, as volumes continue to increase, we will probably see a pressure on the margin. But short and medium term, we are confident that our margins in the product the products business will be around 40%. Operating expenses for the first quarter of 2022 decreased to 12% compared to the same period in 2021. The decrease is primarily due to lower professional fees and lower depreciation and amortization. We continue to invest in marketing and product development and hiring new company team members. These investments are strategic and will strengthen our medium and long term. These investments are fully in line with what we communicated regarding how we intend to use the net proceeds of the registered direct offering we did in October 2021. Summarizing the results of the first quarter of 2022. Net loss attributed to Neonode Inc. was $1.4 million compared to $1.6 million for the same period in 2021. Net cash used in operating activities during the first quarter of 2022 was $2.3 million. Compared to the previous quarter, net cash from operating activities has increased to 16%. In the first quarter of 2022, we purchased component product [indiscernible] to secure future production of our TSMs. I will now hand -- give the word back to Urban.

Thank you, Fredrik. And at this point, I would like to go into our strategy and business update. Our vision is to transform the way humans interact with machines. And we strive for this by offering innovative touch, contactless touch, gesture sensing and scene analysis solutions. Our business model rests on 2 pillars: technology licensing and product sales. We combine this based on nonrecurring engineering services. Our licensing offers are for our technology platforms, zForce and MultiSensing. And our product offers currently are our touch center modules, or TSMs, as we also call them short. The new strategy we launched in 2020 is 100% focused on business to business and on revitalizing and growing our licensing business in parallel to growing our products business. In our product business, we mainly target customers in the elevator and interactive kiosk segments. We also see potential and are working with some customers in the industrial and automation, digital signage and medical equipment segments. Our licensing business has historically been focused around e-reader, printer and automotive customers. And currently, the main license revenues from legacy customers comes from printer manufacturers and automotive Tier 1s. Going forward, we see the largest potential to grow in the Automotive segment, but we also believe we can grow significantly in the Military & Avionics and the industrial automation segments. And potential, in retail segments, is also apparent with our MultiSensing software, as I will describe in more detail later. zForce is a technology platform that comprises IP-related optics, electronics, software and algorithms for advanced IR-based touch, gesture sensing and object detection features. The zForce platform is well proven. We have sold over 85 million zForce licenses to customers worldwide in the last 10 years. And we continue to sell every month a number of licenses to existing customers. And the current customer base includes some of the world's largest printer manufacturers and automotive Tier 1 suppliers. zForce also underpins our products, the TSMs, which are ideal for contactless touch applications, as I'll describe later. MultiSensing is a scalable AI platform that can be used to create advanced scene analysis applications, driver and in-cabin monitoring features in vehicles and retail analytics features. We offer bespoke customer applications tailored for each customer's specific needs. And thanks to the flexibility of the MultiSensing software platform and the efficiency of the underlying machine learning algorithms, the applications require a very different footprint and work well even with low-res cameras and, hence, offering a lot of customer value. To give some insights into our ongoing business development work to secure new development projects that can help us grow our licensing business in the future, I'm sharing the snapshot of our business development portfolio directed towards licensing customers. As you can see, we have several ongoing engagements with automotive OEMs and Tier 1s as well as with several avionics companies and actually one major printer manufacturer as well. Automotive DMS. DMS stands for driver monitoring system. This opportunity is obviously related to our MultiSensing platform. The others that we show here and that we are working on are related on to the zForce platform. First group is concerning applications of zForce to detect foreign objects obstructing the projector in head-up display units, which is an area that is drawing a lot of attention in automotive these days. We are working with several Tier 1s, and we have come quite far with a couple of them in development of prototypes and proving the concept. This is super interesting new application area for our zForce technology. With avionics companies, we talk about rugged touch and touching demanding aircraft applications with typically professional pilots or professional -- other people in the cockpit or in the passenger state of the aircraft. And of course, printer touch is more or less for us straightforward touch application similar to what we have done for HP and other printer companies for more than 10 years. It should be noted here that the sales and development cycles are fairly long when we indicate here what we can expect. If we are nominated to any of these automotive projects that we indicate here, we can expect an application development for 2, 3 years to come. And only after this, new royalty revenues will start to come from these customers. And this has, of course, to deal with a long development cycle in automotive for new models or new platforms. Here, we are no different than any other Tier 1 or Tier 2 suppliers working in the automotive space. And the lead times for new applications and new systems in avionics and also military, as many of you realize and know, they can be even longer than in automotive. The breadth and the width of this portfolio anyway make us very optimistic about the future of our licensing business and what it can grow. And I want to underline that during the development phase, even in the prototyping phase, we can earn actually significant NRE revenues, nonrecurring engineering. We also have opportunities to sell prototypes during that period that can bring additional revenues to us. Moving on to our product business. Currently, we offer commercial off-the-shelf top sensor modules, TSMs. Based on the reflective variance of our zForce technology, we manufacture these TSMs at our subsidiary, Pronode Technologies in Kungsbacka on the West Coast of Sweden and offer them in 11 different lengths from 101 millimeters to 374 millimeters and 2 main variants distinguished by the direction that the light is emitted and received from the sensor unit at 0 or 90 degrees. The TSMs are ideal for contactless touch applications and can be used in 2 main configurations to create such features. Either in what we call the parallel plane configuration where our TSMs are used to project an invisible interaction area or curtain above or in front of the display, keypads or other surface. The other main variant is to use our TSMs together with our holographic display technology where our, in a sense then, should be positioned and aligned with interacting area from our sensor overlapping the projected image in free air. And we tried to illustrate that here. If you have very good sight, you can see in the right picture, below that tinted glass, is an illustration of our sensor module sitting below and pointing up. So that when the user extend their finger into that projected image, you can actually interact with it. And it's very futuristic, and it creates a lot of attention whenever we or our partners show that type of solution. As we have described in earlier earnings calls, there are numerous examples of applications where contactless touch is the way to go and has a big potential to offer new and extended customer value. For instance, different types of vending machines, coffee machines, self-service kiosks, quick service restaurants or at airports, self-checkout, point-of-sales terminals in supermarkets, for elevators or other user terminals and the medical kiosks and medical equipment where, for different reasons, the users do not want to touch the display or the buttons and want to experience a new way of interacting with the machines. Contactless touch is possible with our TSMs for all these types of applications. And why then even consider a contactless touch? And why is it important? The first argument we give is that it's contactless or touchless as some also call it. You don't have to touch the display or the keypad or buttons that you are interacting with. And for a machine and elevator or kiosk sitting in a public space where there are many users using the same machine, it can be a significant risk for transmission of different pathogens or can just give an unpleasant user experience. Here is where contactless touch add value to the customers. We can interact with the machine without touching and avoid getting whatever bacteria or viruses on your hands. Still, we preserve a familiar touch interface or in elevators. And you extend your fingers normally today to press the button, you will use our technology in the same way. But before the finger reaches the button, we will highlight the button. So it's very automatic. It's very convenient. In other applications, say, in medical or in rugged industrial environments, users may have gloves on their hands, and then some other touch technology like capacitive touch will not work. And here, we have a solution that works also with glove or if you usually want to interact with a pen or a key or the corner of your cell phone, for instance. And with our TSMs, that are commercial off-the-shelf products, you can buy them online or directly from us or from some of our partners. We offer free use and smart SDK that allows you to develop your own software applications, and they fit very well for both new installs and retrofit solutions. As described in earlier earnings calls, we used a hybrid go-to-market strategy where we combine direct sales and indirect sales via partners. We also have significant sales through our online distributors, mainly Digi-Key, which is an American company, but they cover more or less the whole world. We work with another distributor in China called Serial and, in Japan, we work with a company called NEXTY Electronics, all sizable and well-known online distributors. We work with partners to penetrate markets that are otherwise difficult for us to reach, for instance, in Asia. It does become a success story for us with our value-added resellers and other partners in Japan, Korea and also China and other parts of Asia. The same in Europe. And we are also working to create similar partnerships with companies in North America. And this way of describing the markets like a pyramid, we feel that we have more and more substance for this argumentation that both elevate the market and the kiosk market can be described this way. So for instance, as we have discussed in our earnings calls during 2020 and 2021, the innovative market is dominated on the top by some 10 major OEMs that often also are multinational companies, and they totally dominate the new equipment market. Below them, there is a segment of midsized companies that can work regionally or nationally. And below them, there are -- there could be many, many smaller firms in the hundreds or thousands. And the company goes also for interactive kiosks. But there, the segmentation is much more apparent and visible. And first of all, interactive kiosks spans a number of subsegments such as vending machines, self-service kiosks, ATMs and so on. And in each of these, and actually in each market, there is plentiful of manufacturers offering this type of products. But overall, also the kiosk market can be described in this pyramid. And of course, we are striving to move upwards here to reach the big OEM players, which has the potential to bring high order volumes for us per order and per year. And this has to do also with the sales cycle that is actually a fact in our business and in our markets. The typical sales cycle starts with a retrofit opportunity. If you look at one segment and one market, this is how we and our partners introduced the concept of contactless touch and our TSM solutions. We work, then, a lot with partners, and they develop different solutions and offer them to the market. And our target customers are, hence, integrators and tech companies, but also, to some extent, OEMs targeting to do their own retrofit solutions. And in many cases, the OEMs are interested in this for different reasons. It's about brand application, quality, but also cash flow and profits that they want to have that business for themselves and not allow third parties to make money on their products. In the second phase, what we are seeing and that we are encouraged by this more and more, once they have us achieved a certain awareness in the market, a certain demand, the kiosk and elevator OEMs get more and more interested. They may want to do retrofits or they may only want to look at new equipment solutions. But for us, then there is a shift. And of course, we want to work directly with OEMs, and they typically want to work directly with us. Sales cycles are a little bit longer. But on the other hand, the potential is bigger per customer per order. And the final step in this sales cycle here is that we are designing in from the beginning. And here, I want to make the reference to HP, Lexmark and other of our printer customers where we are featured with our touch technology in, more or less, every model that they released and have been so for several, several years now. And this is also a development that we are working to achieve and striving for in the TSM business. That may include -- that is on the way to that third stage also, change business model from product sales to licensing. But we see that's one of our strengths that we have, the 2 business model that are complementing each other, and we can serve customers that want to buy low and medium high volumes. And the second point, the customers may likely want to shift to licensing when the volumes grow and then we can continue to work with them and support them in an effective way. So basically, in the sales cycle, we want to penetrate this upside-down pyramid top down, and this happens to be the same as we penetrate the market bottom up. So retrofit, typically, is what we are looking for small- and medium-sized companies and also with our partners who are very much hard work in doing. And our own direct sales is directed towards medium and large companies looking for new installs and retrofit solutions. So these 2 pictures describe the dynamics and the way we are working and the way the elevator and the kiosk markets work. Last 2 years, we have been expanding and developing our partner network. Here, we mention our distributors. We also have a number of value-added resellers, HY-LINE in Germany, MZ Technologie in France, Holo Industries in U.S., for instance. But more prominent is several partners that we have in Japan, Korea, China and other parts of Asia that are very professional, very strong and very active in helping us penetrate these different markets and the different segments. In North America, we have built up last year our own network of manufacturers' reps, and they help us reach customers in North America, U.S. and Canada. And they represent Neonode in front of these customers. And as you know, North America and U.S., especially is a big ICT market. And we see actually very large volume potential in the future from American and Canadian customers. Looking at the progress we have been making in the elevator segment. We have actually secured businesses with a number of elevated control panel companies Finetek in Korea, [indiscernible], YesAR, HKPC China, NZ Technologies Canada, Dewhurst UK and so on. Some of these companies are fairly large and well known, and they work both in the aftermarket and -- versus OEM elevator companies such as Otis, TKE, Schindler and so on. One company that has that multiple flavor is MAD and the other one is the Dewhurst and the third one is Finetek. They all work directly to real estate owners and elevator maintenance firms and upgrade firms, but they also offer and sell the solutions and products to the major elevator company. We are working today with 3 elevator OEMs. And as the next picture shows, we also, today, are quite deeply involved with a number of other elevator OEMs in the world. We cannot disclose the names of these. We have very strict NDAs. And also, they are sort of secretive towards us and our partners in their plans and their rollout strategies. But we are very much encouraged by this. And I want to refer back here to the sales cycle description, and this is proof that we are entering now in a series wave, the second phase where we discuss directly with OEMs and develop new equipment solutions for elevators. With kiosks, the story is similar. We have actually secured businesses with a number of kiosks manufacturers, and they offer, typically, both retrofit solutions and new equipment solutions. Many of these cases, we can, today, not disclose the names of these companies, but they range from some of the very largest interactive kiosk companies in the world to medium size, and in one case, also a small player, a small national player. But still, very, very interesting. And together, it shows that the interactive kiosk market is there and that we have started to secure a beachhead that we are now trying to expand from and grow our business. And this snapshot of our business development pipeline for interactive kiosks solutions show actually just the tip of the iceberg. We have actually many, many more opportunities that we are working on here are some of the most significant ones. Most of these opportunities and customers, they can be found in Japan, Korea, China and other parts of Asia, so APAC. But we also have some very interesting engagements in Europe and North America. And in Europe, if I go top down in this picture, we work with one company doing kiosks for transportation use, say, ticketing machines for train stations and similar, and another customer doing vending machines. They happen to do drink vending machines. And both of these opportunities are significant and quite sizable. So we are super excited about this. And this, again, just shows a fraction of all the opportunities that we and our partners are working on in APAC and EMEA in North America. It also shows a little bit about the expected duration of a typical sales and development project and one we can expect that the customers will launch products. Well, this is not immediate. And typically, what we are experiencing is that the bigger the company gets, the slower they are. So they are, in some of these cases, very, very large corporations that we are working with, and they take time to make decisions, to develop products and then to device a marketing strategy to launch a product and industrialize and actually then launching it. Many of these projects, and in the last earnings call, I was showing an example of a project with 7-Eleven Japan that was digital. We have the sort of a consortium of 7 different companies working together to create that solution with 7-Eleven Japan bought and installed in some of their stores in Tokyo and other parts of Japan. So also, that type of complexity on the supply chain plays a role here and actually slowing us down a little bit. But overall, we are encouraged by the increased interest and the growing maturity of several of these development projects and engagements. And we believe that this is proof that we are on the right track and that we can grow our business in the kiosk segment significantly in the years to come. And that, basically, brings me to an end of our formal presentation. I'll just next going to share some concluding remarks. So let's do that briefly before going to Q&A with our analysts. First point, we see an increasing interest in our TSMs and our solutions for contactless touch. We have shown a snapshot of our business development pipelines for both elevators and kiosks, and we are also showing a little bit of our existing customer base. We have multiple customers and multiple new customer engagements in several countries around the world. Japan is leading the way with Korea, and Greater China, following suit, but also we have several opportunities and new customers in North America and Europe that also show great potential. We're also happy to see a growing interest in our zForce and MultiSensing technologies from automotive customers and also avionics customers. And I want to highlight here that we have started the development project with the European OEM for driver monitoring and also that we are engaged with several automotive Tier 1s regarding head-up display object detection, which we are addressing with our zForce platform. We have mentioned in our report that COVID-19 continues to bring challenges to our sales and business development. And first of all, we have lockdowns and travel restrictions in, for instance, China. Many of you have followed this and know that in China, they are experiencing now a very tough situation with outbreaks of the Omicron variant of the COVID virus. And everything is basically shut down in cities like in Shanghai and neighboring cities. But also in Taiwan, they have very, very strict lockdowns, whereas, Japan and Korea now are starting to open up, thankfully. So it's changing, but COVID-19 is still here and around and affecting us all. We are not directly affected by semiconductor shortages, but our customers are often affected by this and had problems sourcing enough components to scale up their production or launch new products. Also, we feel that our customers, in some cases, are a little bit cautious due to the geopolitical situation and general economic uncertainties regarding the effects of the war in Ukraine and similar, increasing interest rates, oil and gas prices going up and so on. So that's indirectly affecting us and our customers. Overall, we believe we are well positioned and well financed to expand our products business and also to revitalize and grow our NRE and licensing business. And we are hard at work at this every day in the company. And we are very much encouraged by the traction we have in our business development work in Japan, in Korea and other portion of Asia, plus several opportunities with automotive OEMs and Tier 1 manufacturers, plus some additional opportunities that I mentioned in this call. So we strongly believe that we are on the right track and that we will grow our top line significantly in the years to come. Thank you. This brings us to the end of our formal presentation today. And now we would like to open up the call for Q&A.

[Operator Instructions]. Our first question will come from Jesper Von Koch with Redeye.

So let's start with products. So for products, you have 3 major ongoing projects that we view as the main revenue drivers for 2022. So 7-Eleven, the elevator OEM and the Japanese sushi chain. Could you elaborate on the progress of the these?

Yes. First of all, I'm not sure I fully agree that these 3 projects are the main revenue drivers this year, but they are indeed significant wins for us, and we are very happy with them. We have with -- starting with that elevator company, we made an announcement in the fourth quarter. I believe it was about an elevator our OEM deciding to use our TSMs and our contactless touch solution in their new elevators. They have already developed solutions. They have started in a smaller scale to launch it in the market. They are slowly also opening up the curtain when marketing is publicly and showing commercials. And our local people in that market have shared pictures of that, and I'm sure we will continue that rollout. And I have no information suggesting that they had second thoughts, so the rollout is continuing. It's looking good. Also, the feedback we have from 7-Eleven Japan is very, very positive. They clearly have the ambition to roll this out in a bigger scale across their stores in Japan. Personally, today, I'm missing like day fresh updates regarding this -- the pace of that rollout, but we have no information suggesting that they are backing away. Regarding the sushi chain. One of Japan's major sushi chains have already installed in all their self-service kiosks in all restaurants across Japan the contactless touch interface so that you can reserve a table, and you can also preorder food outside of the main restaurant area using their self-service kiosks. They are sitting there in public and being used every day. We are working with other quick service restaurant chains in Japan and also in other countries. And we hope that this will be like a snowball effect when other chains see what this first chain is now doing and how well the solutions work.

All right. So in light of all the uncertainty factors playing an important role at the moment, what's your view on a potential ramp-up of revenues during 2022?

It's apparent that we, indirectly, is -- we are under pressure due to COVID pandemic lockdowns and also, to some extent, the strain of supply chains for semiconductors. We have seen this from some of our licensing customers in automotive, and we are also seeing this from some of our product customer. And it's like indirect effects. So it's a little bit slowing us down and probably taking a little bit of the edge out of our growth this year. But overall, it's not a significant problem or risk. It's a little bit slowing us down. That's our feeling. Overall, the trend is positive. And our own suppliers -- remember, our licensing customers buy special circuits, ASICs from Texas Instruments, which they use to realize the touch features that they are using in their printers and automotive and similar. TI is also a little bit under pressure, but they have confirmed to us that the situation is under control. All of our customers will get all of the ASICs they need for their production. So it's a tough situation for many, but we and our partners, we are actively working to mitigate any problems or risks that this causes.

Okay. Good. And so my last question. Like -- since the Q4 report, you haven't announced any major customer deals. You talked a little bit about it, but how do you experience the underlying customer activity and interest?

We are very positive still. Of course, we are also working hard to actually -- to realize new business wins with customers around the world. We have actually a very broad and deep pipeline, and we have shared some insights into that pipeline today. We expect during this year actually that we're going to get positive feedback from several of these customers that we have indicated here and projects we have indicated here during this call from automotive OEMs, Tier 1s and also elevator and kiosk companies. So we are actually very encouraged by that development still, although we also would like to see a faster pickup of the sales revenues, definitely, with sales volumes.

Our next question will come from Valter Lindhagen with Pareto.

My first question is regarding your input costs. So a hot topic right now among manufacturing companies is increased input costs. I wonder, how much you've been affected? And how -- kind of what's your ability to raise prices? Are you able to do that instantly when you experience increased costs? Or will there be a lag there?

So for our own production of TSMs in Pronode Technologies, we actually have, from last year, secured a significant component stock. And also in the cases where we have more recently bought additional components, we didn't experience any major cost increases. So for that reason, our own situation is sort of stable. Nevertheless, we have reviewed and updated our pricing strategy and also improved on our margins in products business over the last 18 months. So hence, the good margins that Fredrik talked about in his presentation earlier during the call. In other cases, we are fully aware that raw materials and components can drive costs up, and this is a little bit, perhaps, slowing down some of our kiosks and elevator customers, but it's not stopping them completely. And I cannot comment on and I don't know about the magnitude of their challenges with the cost increases and the possibility of doing increased prices of their products. But it's like an indirect effect or a risk for us, not really a direct issue for me or Pronode Technologies.

All right. And then just another question related to the gross margin there. As you mentioned, you showed on one slide that you have had to constantly improve the gross margin for, I mean, quarter-over-quarter for more than a year. Could you just remind us a little bit what has been driving this development?

Yes. I will let Fredrik answer this.

Yes. So during the years, we have looked into the costs that we have had, and we have also increased the price list. So we have -- as you can see in the presentation, we have a table showing you the onetime effects. And the onetime effects, obviously, [indiscernible] moving down. And now we can see a more stable gross margin, and it's relatively well.

So Fredrik means that in the report, there are further details included that explains the onetime effects. And some of them were taken already before and not in this quarter, but in the fourth quarter last year and even earlier than that. Going forward now, we think that we have actually cleaned up the books and taking out a lot of these onetime effects, and we will see like a more stable situation going forward.

Thank you. This concludes today's Q&A. I will now turn the call back over to our presenters for any additional or closing remarks.

We just wanted to thank you for taking the time to join this call, and we wish you a good day. Thank you very much.

Thank you, ladies and gentlemen. This concludes today's event. You may now disconnect.