Futu Holdings Ltd

F:6FHA

Earnings Call Transcript 2019-Q2

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to Futu Holdings Limited's Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

I would like to hand the conference over to your first speaker today, Mr. Daniel Yuan, Chief of Staff of Futu. Thank you. Please go ahead.

[Daniel Yuan, Chief of Staff]

Thank you, operator, and thank you for joining us today to discuss our second quarter 2019 results. Joining me on the call today are Leaf Li, our Chairman and CEO; Arthur Chen, CFO and Robin Xu, Vice President.

As a reminder, today's call may include forward-looking statements, which represent the company's belief regarding future events which by nature are not certain and can be affected by factors outside of the company's control. These statements are based on current plans, estimates and projections and you should not place undue reliance on them. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from those contained in any forward-looking statements.

For more information about the potential risks and uncertainties, please refer to the company's filings with the SEC including its registration statement.

So with that, I will now turn the call over to Leaf Li. Leaf will make his comments in Chinese and I will translate.

[Leaf Li, Founder, Chairman and CEO]

Hello everyone. Thank you for joining us today. I am pleased to report another strong quarter despite ongoing market volatility. On the client side we added over 16,000 net new paying clients during the past quarter and the total number of paying clients hit a 165,000 representing 65% year-over-year growth.

A large part of this growth was through the Hong Kong business. Despite the adverse effect the recent political events on our online and offline marketing efforts in Hong Kong, we were still able to increase brand awareness and achieve 115% year-over-year growth and the number of paying clients in Hong Kong. We will continue to leverage our experience in penetrating the Hong Kong market which was our target market outside of mainland China to expand globally.

As we mentioned on our last earnings call, the number of paying clients, client retention rates, and total client assets are the three metrices that we attach most importance to. As our paying client numbers continue to demonstrate strong growth momentum we are also pleased to have retained 98.1% of them on a quarterly basis which is the highest retention rate that we have seen since 2018.

At the same time, we saw net asset inflows of HK$5.7 billion. Despite the market volatility, our clients clearly continue to entrust us with more and more of their assets. In May, we officially launched the Money Plus, a money market mutual fund distribution platform, in Hong Kong. This marked our initial foray into the wealth management business. Early results indicate that Money Plus has been effective in helping us attract new assets, which as I mentioned is a key metric of our business.

Since the end of the second quarter, we have also started to offer a number of fixed income and equity funds to clients in both Mainland China and Hong Kong. Going forward, the wealth management will be an integral part of our business. Through our proprietary trading infrastructure and superior user experience, we have already attracted a rapidly growing group of young, active and affluent millennials to our platform.

Notably, our average client age is 35, yet our average asset balance at the end of the second quarter was around HK$415,000, which is a much higher level than our peers in the region. In the end, we believe clients are our biggest assets. In that regard, our trading services have laid a solid foundation for our wealth management business.

As our clients accumulate more wealth, become more financially sophisticated and as we gain a deeper understanding of them, we want to cater to their broader wealth management needs and for this we are starting with mutual fund investments. Like we did for our trading and margin financing services we will surround our wealth management products with news, research, and powerful analytical tools, providing our clients with a data rich foundation to simplify their investing position making profits. We want to empower our clients with powerful investor education.

We are still experimenting with our wealth management business, but in time we believe that it can help expand our client acquisition capabilities, increase average assets per client, improve client retention, and provide a more stable stream of revenue.

Now, I would like to provide some updates about our technology investment and enterprise service. In June, we became the first Chinese broker to offer full market apps with U.S. option quotes, with quote refreshings that are much faster than our peers in the region. We have and will continue to invest in technology to bring a best-in-class trading experience to individual investors.

Moving on to our enterprise business, we officially launched our new service brand I&E, in May to integrate our ESOP solutions and IPO subscription services. In the first half of 2019 we acquired 15 new ESOP clients. Among the new additions in the second quarter were Douyu, the recently-IPO’d game-streaming business, and a number of other leading Chinese new economy companies.

Our ESOP business has successfully handled some of the most complicated ESOP system for a variety of Chinese tech companies and we continue to differentiate ourselves with both positive and quality of our clients in this area. Moreover, our ESOP solutions have proven to be a consistent client acquisition channel for our Mainland China business.

And finally, on August 12, we announced the appointment of General Atlantic to our Board. W e believe GA's extensive experience investing in technology platforms in the region will benefit us as we further build our platform and deliver long-term value to shareholders.

So with that, I will now turn the call over to Arthur to discuss our financial performance.

[Arthur Chen, CFO]

Thanks Leaf and Daniel. We concluded the second quarter with total revenue of HK$260 million or 40% year-over-year and a 10% quarter-on-quarter increase. We consider this reasonable growth against the backdrop of the broader market volatility.

Let me walk you through the key financial details for this quarter. Brokerage commission and handling charge income was HK$122 million, an increase of 36% from the same period in 2018. Quarterly growth was a moderate 7%. Total trading volume came down a little bit due to a weak FD market, yet our expected take rate went up due to the expiries of promotion discounts. Brokerage commission and handling charge income contributed to about 47% of our total revenue in the past quarter.

Interest income was HK$114 million, an increase of 31% you and 6% Q-on-Q. The rise was primarily due to the increase in the balance of the client deposits and the improved returns on first balance due to enhanced capital management as well as higher benchmark interest rates in the U.S. and Hong Kong; our margin financing and the secured lending balance dipped by 1% on a yearly basis but went up 7% Q-on-Q. Interest income contributed to about 44% of our total revenues.

Other income was HK$24 million, a 159% year-over-year growth, was mainly attributed to our growing enterprise service business. This contributed remaining 9% of our total revenue.

On the cost side, total costs were HK$64 million, an increase of 6% year-over-year and 4% Q-on-Q. Brokerage commission and handling charge expenses were HK$24 million, an increase of 21% year-over-year and 16% Q-on-Q which was roughly in line with our brokerage commission income growth.

Interest expenses decreased to 21% year-over-year to HK$19 million and the processing and the servicing cost increased to 26% on higher market information and the data fees including cloud service fees as well. As a result, we recorded total gross profits of HK$196 million, an increase of 56% year-over-year and 12% Q-on-Q which translates to a gross margin close to 76% which was a record high.

In terms of operating expenses, total expenses were HK$145 million, an increase of 67% year-over-year and 28% Q-on-Q. The [indiscernible] our operating cost, research and development expenses were HK$64 million, up 83% over last year and 19% from last quarter. The rise was mainly due to the continued increase in headcount for our R&D functions where we have been hiring most aggressively. At quarter end and R&D personnel account for about 70% of our total employees.

Technology creates the biggest entry barrier for our business in our view and we will likely continue to attract the talents as we expand our trading products and branch out into new businesses, such as wealth management.

Selling and marketing expenses were HK$42 million, an increase of 46% year-over-year and 33% Q-on-Q. The rise was primarily due to higher branding and marketing spending particularly in relation to our new Money Plus business. Our marketing in Hong Kong has turned out to be quite effective resulting in 115% year-over-year growth in terms of the number of new paying clients acquired in Hong Kong.

G&A expenses were HK$39 million, an increase of 68%. The rise was primarily due to the increase in headcount for general and administrative personnel. At the quarter end our total headcount reached 688 and roughly 65% increase from one year ago. As a result, our pretax income was HK$48.2 million up 38% [ph] from last year and also down 21% from last quarter.

Net income increased by 129% year-over-year to HK$55 million due to an additional tax allowance for our R&D expenses from local tax. And we mentioned we continue to expect our full year effective tax rates will be blow 20%. Non-GAAP adjusted income increased by 122% to HK$59 million.

That concludes our prepared remarks. We would now like to open the call to questions. Operator, please go ahead.

[Operator]

[Operator Instructions] Your first question comes from the line of Weicheng Tang from Goldman Sachs. Please ask your question.

[Weicheng Tang, Goldman Sachs]

Hi management. Yes, thanks for taking my questions. I've got two questions, one is regarding wealth management. As Leaf just introduced you have been starting to sell not only mutual money market funds but also some fixed income or other maybe equity and mutual funds to the investors, we would like to, you've did mention and could give us an update in terms like the volume of funds has been sold since like we rolled out Money Plus product in May and also like the average fee on those products? And also if you have some balance like the exiting outstanding balance of those funds has been sold to investors?

Yes, and the second one is related to the recent Hong Kong situations. I think a lot investors would be worrying about how this heated situation in Hong Kong would impact our operation? Can management give some quantitative guide like measures or metrics to let us know like since June how like client affect rose or the trading velocity as well as like marketing campaign or all of those like business activities has been impacted by this situation in Hong Kong? Thank you.

[Arthur Chen, CFO]

Okay, thank you Weicheng. This is Arthur. I will answer your question. For number one, about how mutual fund products, actually we're just launched the money market funds in second quarter. At the end of the second quarter our balance for the money market is close to HK$1 billion and just recently, actually last week we further increased our fund portfolios. In connection with the money market funds we also launched quite [indiscernible] fixed income products and also the equity product as well. You can actually see the breakdown of our funds in our new platform as well.

I think in the third quarter we are developing new marketing campaigns in order to promote our new service offerings. But having said that, I think the most important thing is we try to leverage our technologies to give more deep and more wide investment educations to our users, in particular now our users and customers attaching to our platforms have limited knowledge about these new products such as the fund. This is I think the areas we will pay special attention in these quarters.

And for the recent Hong Kong social events I think if you can imagine or a few have already witnessed it is creating a lot of the market volatilities alongside with the recent Sino-U.S. trade wars, which I think actually on our side we will come to bottom market volatilities which we think it will accelerate the market consolidations in the long term. As a leading player in this space, we actually will be better off in such market consolidations.

So in terms of financial impact, I think for the revenue and also for the cost side so far we think the situation is quite manageable. Having said that, I think the negative impact mainly relies on the new clients acquisitions particularly in Hong Kong because of the recent events we also intentionally delayed certain of our marketing campaigns because we think, you know, even we put a lot of marketing campaigns nowadays may not turn out to be very effective channels, or affective solutions to acquire new clients.

[Weicheng Tang, Goldman Sachs]

Thank you, Arthur. Can I followup on the question regarding the mutual funds like, because like we are not allowed to open the accounts on your platform, so can you give us some more information regarding, I actually saw on your WeChat channel that you officially launched, I recall is like Sum Plus or this, so how many funds and particularly what type of funds are listed on this platform and is it open to blacklist [ph] I think you said is it open to all like Hong Kong and Mainland investors?

[Arthur Chen, CFO]

Sure, in terms of the coverage, I think in the second quarter we are more focused or tailored to the Hong Kong based clients in terms of the Money Plus or in the money market funds. Actually we now expand the coverage to few of our existing clients including the Mainland clients and also the Hong Kong clients as well. And also we will particularly enhance our features and the functions so that even the financial service professionals because you know you guys are not allowed to open a brokerage account, trading brokerage account.

I think it will be very likely for you to open just the fund accounts in our platform so that we can solve your constraint through our technology expertise. And in terms of the number of the funds we launched up to now we have already launched close to 10 products including three to four fixed income products, four equity products and the three to four mutual fund products and I do expect the number of the funds we launched at the end of the third quarter will be close to 20. For the funds nowadays just SFT [ph] recognized products, so it can be offered to all major clients.

And I just forgot to answer your question before in terms of fee structures. For the money market actually we don’t charge any subscription fees, but for the management fees charged by the -- for managed companies we do have certain percentage as a rebate. And for the fixed income products and also the equity products on top of the -- for management fee rebate we also charge 0.8% one-time subscription fees in our platforms as well.

[Weicheng Tang, Goldman Sachs]

Okay, thanks Arthur. I would heavily try to fund accounts if we can on your platform.

[Arthur Chen, CFO]

Yes, you should.

[Weicheng Tang, Goldman Sachs]

Thank you.

[Daniel Yuan, Chief of Staff]

Thank you.

[Operator]

Your next question comes from the line of Kelvin Chu from UBS. Please ask your question.

[Kelvin Chu, UBS]

Hey, thank you for the presentation, and congratulations again regarding the launch of the mutual fund institution platform. Just a product question on that, can you remind us the key competitive advantages you see with your platform versus key competitors in Hong Kong which I believe the sales of mutual fund are still mainly conducted by commercial banks now?

Second question is, mutual fund would you consider launching margin trading solutions for mutual funds kind of like services offered by private entities [ph]? And third question regarding this platform just want to get updates regarding any additional costs we should foresee after the launch of this platform or should that be planned as cost synergy with the existing brokerage platform we have?

And then the other question is regarding client mix. I noticed that in the past few quarters Futu's client acquisition has been I would say comparing to your in force customers more skewed through Hong Kong locals, so potentially your new customers from Hong Kong locals which contribution price risking to 30% now. I just wanted to have an idea from management team on the long term client that we should target between Hong Kong and Mainland Chinese? Thank you.

[Arthur Chen, CFO]

Thank you, Kevin. Let me answer your questions. I think maybe you know address your last question first give answers to purely number questions. In terms of the new clients we acquired in the second quarter, the breakdown is roughly to 50% spreading over Mainland China and also in Hong Kong. As we recall, in the first quarter the clients we acquired in the first quarter 60% of them came from the Hong Kong local people and the remaining 40% came from China. I think in the long run the percentage of the Hong Kong paying clients will continue to go up. As we think, this year actually will be the first year for us to pay more attention about clients outside of Mainland China.

For the money market or fund distribution compared to our platforms with other commercial banks, we get some feasibility before we launch our products. I think the major pinpoints for the Hong Kong retail person nowadays, for them to buy the mutual funds through the commercial banks is number one, the cost is still relatively high. If you look at certain commercial banks such as HSBC, Citibank, et cetera, normally clients seem to be charged 2% subscription fee for the fixed income products and 3% for the equity products versus our charges is roughly 60% to 80% lower compared with their fee rate.

And secondly it is the convenience, because we are plugging this money market funds products into their brokerage account, i.e., people can buy, sell their stocks, at the same time they can use the purchasing power to subscribe the funds in a simultaneous manner. And also we spend a lot of efforts in the mobile technology enhancement. So in particular for these millennial generations, they are - they can easily use our mobile phone APPs to do these transactions.

And definitely in the long-term we are considering to put more leverage or do the financing for these funds products as well. I think, this is our long-term footprint in terms of who - in terms of our whole wealth management strategy as well. In terms of the cost, actually, I think, we don't have increased a lot of new marginal cost alongside with this new business in terms of the system setup and also the product development, et cetera.

So going forward, there will be definitely some marketing cost in connection with this fund distribution. But I think, in terms of economics model and also the client retention and also the new assets, these new addressable market people can bring in these costs will be worthwhile. Thank you.

[Kelvin Chu, UBS]

Thanks Arthur. Just follow-up with that, regarding the source of customers on the mutual fund distribution, will you foresee more of the potential customers with your existing brokerage clients, or would you think the launch of the mutual fund distribution platform would also help Futu to acquire a lot of new customers?

[Arthur Chen, CFO]

I think actually it will help in both manner. If we look at the numbers or the data in the second quarter for our Money Plus, the initial response or the clients to subscribe this money markets and all came from the existing clients, which I think it is also a natural situation, even they have already connected with us, they have already accessed in our accounts. So it is very convenient for them to buy these mutual fund products.

But, I think after May, starting from June, we see more and more people actually, they are not actively trade in these stocks, but through our new products, we attract a new type of people and also more importantly, we attract new money outside our universe, i.e. we did see a lot of new people because of this new products start to open the trading accounts, start open the fund accounts in our platform and have started to put new money into our platform.

So I think going forward, this is also why we are so determined and we are so convinced, we will go through this direction, because it too will enlarge our addressable markets and also too it will attract the new people with new money inflow.

[Kelvin Chu, UBS]

Thank you, Arthur. Very helpful.

[Arthur Chen, CFO]

Thank you.

[Operator]

[Operator Instructions] Your next question comes from the line of Lizzie Liu [ph] from HSBC. Please ask your question.

[Unidentified Analyst]

Hi, Management, it's Lizzie [ph] here, and I have three questions. One - the first one is that also about wealth management, so where do we book our earnings for the wealth management in the P&L statement, is it in the other income? And also for the fee structure, we can see that from our official website about our products in the fee structure, there is 100% subscription fee for us and then a sharing mechanism with the fund companies to share about the annual management fee. So based on our own research, it's usually 50% to 60% sharing to the distribution channel in Hong Kong. Are we following the same policy?

And the second question is about margin financing. We can see that from the balance sheet we have over HK$3 billion balance of margin financing, but we only have less than HK$1 billion bank borrowings. So where do we have the funding source for margin financing business and what's the funding costs with this business?

And my third question is about - our management just said Hong Kong is the first stop of our internationalization. So where or which cities will be the choices that we are considering for next stops and are - is Mainland one of our choices as the Mainland market is also opening up for the brokerage licenses? Thank you.

[Arthur Chen, CFO]

Sure. For your three or maybe four questions, I will address the first three and the last question will be addressed by Leaf. In terms of the wealth management P&L impact, you are right, currently the relevant revenue has been recorded in the other income items, because we just launched the money market funds in this May. So the P&L in passing to the second quarter is too limited.

In terms of fees structure, you are also right. I cannot disclose the exact rebate numbers from the different mutual fund company. But I think your guesstimate or the industry practice also applies to us as well. For the margin financings, our major funding source actually came from the Hong Kong local banks. On average our borrowing costs were in the range of a HIBOR plus 120 basis points to 130 basis points plus. Besides the margin - besides the bank borrowing, also we support our margin financing through our own capital since we finished our IPO in March.

Then Leaf will share with you about his thoughts about our further internationalization strategy.

[Leaf Li, Founder, Chairman and CEO]

So following Hong Kong, the U.S. will be our second mark -- second destination for intern -- internationalization. So in the U.S. we have got all the relevant SEC and the clearing licenses. And I'm not sure if you've noticed earlier this year we've actually launched our U.S. product which is MooMoo and we are actively polishing those products and adding more features. And in the second half of this year, you'll see a lot of new iterations of our Futu MooMoo product.

So since we're still very much in the stage of developing our product, we haven't been marking that aggressively, but we will -- you will see a lot more marketing campaigns in the second half. Yes. So MooMoo will be the basis of our new iterations outside of China and Hong Kong. Thank you.

[Operator]

[Operator Instructions] Your next question comes from the line of Yiwen Zhang from Bank of China. Please ask your question.

[Yiwen Zhang, Bank of China]

Thank you, management, for taking my questions. I have a question regarding new paying client addition. So among the 16,000 new additions can you breakdown for how much come from ESOP, how much is organic, and how much is related to the marketing campaign? And given the market campaign is more expensive in your Hong Kong than China, then how should we view the [indiscernible] the marketing expense going forward? This is my first question.

And secondly, I saw rapid growth in your others revenue. In your prepared remarks you said it's driven by IPO [ph] and enterprise [indiscernible]. Can you give us a size or relatively could you also rate what the true -- of [indiscernible] China and…?. Thank you.

[Arthur Chen, CFO]

Okay, thank you. For two questions. Number one, in terms the channels from the new clients are quite similar to first quarter, the most part will come from the organic or water mouth [ph], which contributes over 65% of our total new paying clients acquired in this quarter. And also Hong Kong, the online marketing and also the Hong Kong offline marketing accounts for roughly close to 20% of our new paying clients acquired for this quarter. Going forward, you are right. The marketing cost or equity cost for the Hong Kong clients is relatively high compared with Mainland.

But I think from the unit economics, judging from, these clients annual ARPU contribution and compared with our spendings in terms of new clients acquired it still make sense for us to continue to spend the money to acquire them in early manner. Because if you can't engage them in a money, much early situations, actually, they will stick with our platform for even longer time. So from a lifetime values perspective, we do think, acquire clients as early as possible is more critical compared with the current ESOP impact.

In terms of the other revenues, you're right, mainly come from the ESOP contribution and also, the IPO distribution. I think in terms of the proportion wise, IPO distribution accounts for even bigger part versus other revenue by -- I think the in the past - overall is too relatively limited given that the overall revenue just accounts for 9% of our total revenue.

[Yiwen Zhang, Bank of China]

Thank you. Thank you, Arthur.

[Arthur Chen, CFO]

Thank you.

[Operator]

[Operator Instructions] We have a follow-up question from the line of Weicheng Tang from Goldman Sachs. Please ask your question.

[Weicheng Tang, Goldman Sachs]

Hi, management. Yes, just on -- following up on two questions. One is, can you give us an update of your product pipeline regarding the securities lending futures options? When would they be rolled out in second half of '19? The second is regarding the tax. We heard that you mentioned there is like a tax rebate on the R&D expense. We just want to find out, is this rebate one-off like based on the aggregate R&D you have expanded or you would be -- is the constant tax rate cut on your R&D expense?

If I may, third question regarding the interest income, sorry interest expense. We found that it’s like we use -- I'm guessing the major expense, interest expense, you are - corresponding to the liabilities of short-term borrowings and payable to brokers and maybe it's like all interactive focus.

So if we do the calculation we found on a quarterly basis that average interest expense cost has went up a bit, we calculate that round 3.9% in first quarter and 4% in second quarter. So would you think that the cost will come down later on, given you mentioned earlier that after listening your borrowings from banks, actually -- it actually have lower spreads on HIBOR? Thanks.

[Arthur Chen, CFO]

Okay, Weicheng, sure. I leave the first question to our -- to my colleagues Robin Xu, who will answer you a little bit later in terms of the new product pipeline to be launched in the second half of this year.

Let me just address your second and the third questions first. In terms of tax rebate, it is one-off on a quarterly basis, but it will be recurring items on a yearly basis. The thing is, you know, according to the local tax bureaus treatments, they have in order to promote technology spending, they actually allow additional 40% to 50% of your earning expenses in terms of your deductions for the -- for your effective tax rate calculations.

So in the second quarter of this year, actually we finished all the applications and the document reviews by our auditor, PricewaterhouseCoopers, which synced the applications to the tax bureau and also all the documentations was satisfactory. So we have already deducted such tax benefits for 2018 in this quarter. Given that we continue to have a huge R&D spending going forward, I do think the relevant treatments will occur in 2019 and 2020 as well.

For the interest expenses, you're right. I think, in terms of the HIBOR spread, which charged by the commercial banks will go down gradually, given that after this thing we actually have more bargaining powers or get more commercial treatment from these commercial banks.

I think it is relatively, the interest expenses cost increased in second quarter is mainly due to the underlying HIBOR increase, which you can see, of course, at the same time, we also benefit a little bit from this in terms of the interest income as well. But I think, in terms of the spread, the borrowing costs spread on top of the HIBOR, it will definitely continue to go down in the remaining quarters.

Now, I hand over to Robin for your first question.

[Robin Xu, Vice President]

Right. So far our new product pipeline in the second half of this year, as for U.S. trading, we'll start offering our clients the opportunity to lend out their stock positions. And on the Hong Kong side we will start offering the short selling functions, the options and as we just mentioned, we will offer more mutual fund products on our platform. And also, we'll have an iPad version launching too in the third quarter. And also we'll have a specific package catering to the more frequent traders in the second half as well.

[Weicheng Tang, Goldman Sachs]

Okay, yes. Thanks.

[Operator]

[Operator Instructions] Your next question comes from the line Pai Chieh-Yu [ph] from DTC Investment Management. Please ask your question.

[Unidentified Analyst]

Hi, guys, thanks for taking my question. Can we get a bit more detail on the effective commission rate? What makes it to increase by like 30%-38% or something year-on-year? And my second question is on the sales and marketing expenses. I mean, how do you use this - the expenses, I mean, on the accounting basis, does it include the rewards that you give to the new users and give to the new users of your Money Plus? Yes.

[Arthur Chen, CFO]

Okay, sure. For the commission rate, we actually - we keep quite firm, if not even went a little bit higher compared with the first quarter, thanks to more expirations of the discount promotions. And also a lot of new IPO activities starting from second quarter, also enhanced our commission rate, given that for the IPOs we normally have some one-off handling charges which has been blended into our commission revenue as well.

For the marketing spending, you are right. In terms of accounting treatments or for all these -- the reward or these coupons, we all recognize into our marketing expenses by a [queue] basis. So it is being fully reflected in to our P&L on a timely basis.

[Unidentified Analyst]

Yes, thank you. That's been helpful.

[Arthur Chen, CFO]

Thank you.

[Operator]

[Operator Instructions] There are no further questions at this time. I would like to hand the conference back to Mr. Daniel Yuan. Please continue.

[Daniel Yuan, Chief of Staff]

That concludes our call today. On behalf of the Futu management team, I would like to thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our Investor Relations representatives. Thank you and goodbye.

[Operator]

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect.