Boozt AB

STO:BOOZT

Earnings Call Transcript 2020-Q3

[Hermann Haraldsson, Co]

Thank you, and good morning, and welcome to our Q3 presentation. And yes, my part probably will be quite short as most of what I'm going to say has been said already a couple of weeks ago, but let's go to the first slide to the key highlights, which is Slide 2. Just to highlight again, we have seen continued high new customer intake as well as strong growth from our new customers. We grew 23% in the quarter, year-to-date 23.5% but if we take into consideration that we had some impact from currency, the change of agreement structure with this large brand that we have been talking about before, and also a fair use policy, if we would kind of adjust for that, the growth would have been around 29%. So a very, very strong quarter growth-wise. Our adjusted EBIT margin came at 7.4% in the quarter, and it's an improvement of 11 percentage points and is driven by mainly improved gross margin, but also operational improvements in our fulfillment setup. The other segment is profitable. After much pain, we're finally having a profitable segment, our physical stores, which is good. And all this, of course, means that we have strong cash flow driven by improved operating profit and positive working capital changes. We also have announced that we're expanding the Home segment as well as we intend to do a dual listing on Nasdaq Copenhagen combined with a public offering in connection with the listing. And finally, we have also communicated that we will upgrade our 2020 outlook due to the strong current trading and the improved stock level, meaning that we now expect the net revenue growth to be at the upper end of the range 20% to 25% and the adjusted EBIT margin to be between 5.5% and 6.5%. If we turn to the next slide, Look at the KPI highlights. Customer satisfaction. As always, this is the most important slide. We can see that our customers are still quite happy. Our Trustpilot ranking is still -- rating still high, 4.6 and 5 stars, and the NPS score is at 72 which is also a very strong best-in-class NPS score. If we go to the next slide, look at the average order value for Boozt.com, average order value in the quarter had a slight increase from SEK 801 care to SEK 808, which is very, very good. If you look at year-to-date, again, we see an increase, so we're now at SEK 807, and kind of the most satisfying part is that our rolling 12 months average basket size is SEK 817. And again, as we said before, this is kind of the key metric for deciding on profitability in our industry, and we're extremely happy that we've managed to edge slightly upwards quarter-by-quarter or year-by-year on our average basket size. So this means that kind of our introduction and adjacencies of the categories adds slightly to the basket for every quarter. Going to the next slide on the cohort development. As you will see, our active customers for the last 12 months has gone up by 19%. So in Q3, the active customer base, last 12 months, was a little more than 1.8 million customers. The interesting thing is to see is that actually the number of orders per active customers has come down as well as the true frequencies. So even though we adjust for a fair use clause, where we saw that we have extremely high ordering customers, we see also that the true frequency is down. And this is actually as we see a testament to what has been happening in the industry, where the markets in general have been down. We see that all customers are buying less and that our growth is mainly driven by very high new customer intake. For the first 9 months of the year, we have had more than 30% increase in absolute numbers in new customers, so which is an all-time high, and very strong new customer intake. So this is actually what we believe is kind of very telling about our industry that the overall consumption in the region is probably down by some 10% to 20%, but you have had a huge increase in penetration and which we can see that is driven in our part by a lot of new, first-time e-commerce customers. Obviously, we expect that once we get back to normal buying behavior, once people start to go out again, go back to work and start to -- yes, almost dress up again, we expect that the old customers will go back to the normal behavior. And we see that new cohorts behave very similar to the old cohorts with regards to repurchase rate, et cetera, et cetera. So we think that this bodes quite well for future revenue developments. If we go to the next slide, where we talk about expansion into the Home category, we just mentioned this a while ago when we talked about going into the Home category. We believe that now is time for us to go into this Home category. It fits quite well into our operations. It fits quite well into our warehouse operations. It fits quite well into our supply chain setup. We don't need to do any modifications in our setup. So we think it's now time to introduce the Home category to our customers, where we will focus on as we're doing on fashion on the mid-to-premium product Home and Interior brands. We've already signed more than 100 brands and the target is to reach to 200 brands before the end of this quarter. We have added a very strong team of some experienced Home buyers and merchandisers. So we are quite confident that we will have a good launch in this category. And we are doing a soft launch. So we're doing a soft launch during Q4, and expect to be strongly up and running during Q1 next year. And our expectations long term is that the Home category will be one of the biggest categories on Boozt.com within the next 5 years. If we go to the next slide, which is my final slide before I hand it over to Sandra. Just to talk about our capital allocation and our capital raise. As we said, when we announced the capital raise that we are raising capital to pursue some strategic priorities. We still have a very high ambitions for our organic growth. But at the same time, we see some interesting opportunities. There are not many out there, but we see some interesting opportunities where we can strengthen our core business. And this leads me to the capital allocation principles that we touched upon 3 months ago when we announced the Q2 report. Our main focus is always to reinvest for the organic growth, be it in capacity, inventory, innovation or people. And now with our strong cash position, we have the funds to do that and find that ourselves. But we would like to have some additional funds to be able to do some bolt-on acquisitions. And these could be within categories -- to get access to category expertise, to become a dominant player in a category much faster than organic growth would allow us. It could be to get access to some technology or to strengthen our Nordic market presence. And even though we are planing to raise capital, there's always a risk that we will not find any suitable asset that -- an asset that meets our quite strict criteria. And if we don't do that, then, of course, we will return excess cash to shareholders in the most tax-efficient way. We also just want to highlight what will not do. It's often easier to say what you will not do instead of saying what you want to. And firstly, we will not pursue acquisitions in unrelated areas. You don't have to fear that we're going into electronics or food, something like that. We will not expand our core business outside the Nordics. We are extremely focused on our unit economics. So we will not do anything that would jeopardize our unit economics, mainly something that could reduce our market size. And as again, even though -- even though EBIT margin is strong, we will not do anything that will kind of optimize short-term margin for -- on the expense of long-term opportunities. And finally, we are like being one too few. We like to being extremely focused on driving costs down. So we will still maintain focus on cost control and operating efficiencies. And finally, just about the dual listing and the public offering in Copenhagen. The reason why we are going for Copenhagen is, of course, as I said before, we are this Øresund's company or a greater Copenhagen company located 20 kilometers from the center of Copenhagen although in Sweden. Denmark is the country where we have the strongest brand presence, where we have the strongest brand awareness, where we are becoming a household brand. So we believe that this will strengthen our brand among the customers as well as we have seen that there's a strong investor interest out of Denmark. I believe some 38% of our capital is owned by Danish investors, and we believe that by doing a listing in the Copenhagen, we can increase liquidity in this year. So if we go to next slide to the financial update, I would like to hand over to Sandra Gadd, our CFO.

[Sandra Gadd, Group Chief Financial Officer]

Thank you. So if we look at the group results, it concludes the net revenue growth of 23% for the group in the third quarter. Currency had a negative impact on net revenue growth of approximately 3 percentage points. The change to consignment-like agreement with a large brand partner as well as the introduction of a fair use policy in the fourth quarter of 2019, impacted net revenue growth negatively in the third quarter. Together with the currency effect, the negative impact was around 6 percentage points. In addition, net revenue growth was also negatively impacted by the lower stock availability in the quarter, which was a result of a very strong sell-through in the second quarter as well as delays in the supply chain in relation to [ AB 20 ] in deliveries. The low stock cover was partly compensated by high level of in-season buys made during the summer. Due to the continued strong sell-through, our buying and merchandising team continues to buy in-season goods at higher than normal levels to secure stock availability also for the fourth quarter and the first quarter next year. Just as in the second quarter, the sales mix was relatively higher growth in the Men's, Kids, Sports and Beauty categories had a positive effect on return rates also in the third quarter. The return rate was approximately 5 percentage points lower than last year, where the effect from implementing our fair use policy explains around half of that change and the other half is related to the change in product mix. For the first 9 months of 2020, net revenue growth was 23.5% with a negative impact from currency of around 1 percentage point. Together with the impact from the consignment-like agreement as well as the implementation of the fair use policy, net revenue growth for the first 9 months was negatively affected with around 4 percentage points. The gross profit improved significantly with 7.3 percentage points to 42.8%. The increase was driven by higher product margin. The product margin development was supported by the inventory mix and the high sales in the spring and summer, where the tail of inventory from previous seasons was cleared to a much higher extent than historically. This means that we didn't have to discount in-season or older season goods to the same extent as last year, hence a higher product margin. The Q3 gross margin was also supported by contractual improvements, including the change of agreement structure with a large brand partner. Items that were part of the extraordinary write-down in March, many of which were written down with 50%, was used as traffic drivers during the third quarter and was on average sold at cost price. Hence, it rather diluted the margin than boosted it as we saw in the second quarter. The effect on the overall gross margin for the quarter was, however, marginal. For the first 9 months, the gross margin improved with 1.2 percentage points to 39.4%. After the third quarter, approximately 80% of the items that were written down in the extraordinary write-down in the first quarter has been sold. We have recouped approximately 84% of the write-down cost value during Q2 and Q3, and approximately 20% of the items are left in inventory. The adjusted EBIT was 7.4% in the third quarter, an improvement of 11 percentage points. The improvement was driven by the strong gross margin as well as improvements in the fulfillment cost ratio. In the fulfillment cost, we have seen improvements both in the unit economics in our warehouse operations, positive effects from lower returns as well as improvements in distribution costs. The adjustments in the quarter consists of social charges and IFRS 2 costs related to the share-based payment for the Group's LTI program. For the first 9 months, the adjusted EBIT was SEK 149.7 million, an increase of 4.8 percentage points to 5.1%. The improvement was driven by the improved gross margin as well as improvements in all cost ratios, particularly in the fulfillment cost ratio. The adjustment for the first 9 months consists of one-off costs, including write-down of SEK 35.1 million related to the closing of the Beauty by Boozt store in Copenhagen. The adjustment also consists of social charges and IFRS 2 costs related to the group's LTI program of a negative SEK 34.3 million. Finally, you can ask yourself how much of the improvements we've seen over the last 2 quarters that is related to COVID-19. And to be honest, we believe that it's really, really hard to put a definite number on this. What we do know is that the high sales during the second quarter was a result of the actions made in March and April when we decided to do an extraordinary write-down of prior-season inventory and take actions to make sure that we wouldn't end up with high levels of unsold inventory at the end of the spring/summer season. At that time, we did not foresee that the major lift in online penetration levels that materialized during the second and third quarter would more than compensate for the overall lower demand for fashion. As we have talked about before, our buying and merchandising team has worked around the clock since April to secure stock to support the continued strong growth. The actions taken all contributed to the situation where we are today with a fresh inventory position that enable us to realize the higher gross margin that we've seen in both in the second and the third quarter. We do not believe that it is fair to assume that we will have the same situation when we report our Q3 next year. So we believe that it's reasonable to say that the gross margin in the third quarter is affected by COVID-19. In addition, we can also see that the shift in product mix with higher growth in categories such as Men, Kids, Sports and Beauty, came much faster than anticipated when we entered this year. It has been our strategy to increase those strategies that categorize share of the group's total revenue, but the ongoing pandemic speeded up that structural change. Even if it's driven by the pandemic, we, however, expect that those effects will remain also once the impact of the pandemic decreases. The lower return rates we've experienced during 2020 are partly a result of the shift in category mix, but also a result of us implementing the fair use policy in November last year. Following the lower return rates, the fulfillment cost ratio also improved since return handling is the most labor intense part of our operation. So the main part of the improvements in the fulfillment cost are, however, related to operational improvements and general scale effects. So based on this, we believe that a major part of the gross margin improvement in the third quarter is a COVID-19 effect that we don't expect to see again next year. Looking at the full year, the potential improvement in gross margin we expect to see is also related to COVID-19 and not something we expect to see again next year. So if we move to the next page, we can see that the net revenue growth for Boozt.com was 14.9% in the third quarter, negatively affected by currency fair use and the change of agreement structure with a large brand partner, but also the lower stock availability due to the very strong sell-through in the second quarter. This was partly compensated by high level of in-season buys. Growth was driven by Men, Kids, Sport and the Beauty category, which all have lower return rates than the Women's category, which also positively affect the net revenue growth in the quarter. The new customer intake was high also in the third quarter, while the average order value slightly increased to SEK 808. The adjusted EBIT margin increased with 11.7 percentage points to 7.1% in the quarter. The increase in adjusted EBIT was driven by higher gross margin and lower operational costs. So moving on to Booztlet on the next page. We see a continued strong net revenue growth of 101% in the quarter and 127% for the first 9 months of the year. The average order value increased to SEK 666 in the quarter and SEK 678 for the first 9 months. We have a high focus on building brand awareness around Booztlet especially since we're in a time of economic uncertainty, where we believe that the Booztlet's position at the Nordic designer outlet is more relevant than ever. Therefore, we have increased the marketing exposure in both online and off-line channels within the Nordics. Our ability to offer confidence and relevant selection of inventory is key to support continued strong growth, which is the reason that we strengthened our Booztlet buying and merchandising team with several new talent over the last couple of months. The adjusted EBIT margin of 8.4% in the quarter is 3.4 percentage points lower than last year. Since our Booztlet operations have an implicit high adjusted EBIT margin, we consciously sacrifice profitability for growth through increased marketing spend and higher promotional activities leading to lower product margins. The reason is that we see an enormous market potential for Booztlet. Our data proves that customers, once they have tried Booztlet, come back and become loyal and profitable customers. As we have talked about before, the Booztlet customer becomes profitable in less than 12 months. Building a strong customer base, therefore, is our main priority, and we are just getting started. The adjusted EBIT margin for the first 9 months of the year was 7.6%, a decrease of 3.6 percentage points, driven by extraordinary write-down of stock in the first quarter since the proportion of the write-down was relatively higher compared to the share of written down items that actually has been sold on Booztlet. If we move to the next page, we see that the other segment had a net revenue of SEK 9.3 million in the quarter, corresponding to a net revenue growth of 86.6%. The increase is driven by successful opening of the new Booztlet store in Copenhagen at the same premises where we previously operated the Beauty by Boozt store. The new Beauty by Boozt store in Malmö had a similar revenue as the closed Beauty by Boozt store in Copenhagen had. For the first 9 months, the net revenue decreased by 19.4%, which was driven by the closure of the stores in the spring due to the coronavirus pandemic. The adjusted EBIT amounted to SEK 2 million in the quarter. This is the first quarter where the Other segment contributes to the group's profitability. Both Booztlet stores are profitable, while the Beauty by Boozt store is around breakeven for the quarter. The adjusted EBIT for the first 9 months was a negative SEK 7.9 million, that is to be compared to a negative SEK 12.3 million last year. The improvement is driven by the positive development in the stores as well as the closing of the Beauty by Boozt store in Copenhagen. Negatively impacting adjusted EBIT with SEK 5.5 million is the revaluation of the lease contract for the Beauty by Boozt store in Copenhagen to include an 18-month penalty fee for using the exit clause which was done in the first quarter. The adjustment consists of one-off cost of SEK 35.1 million related to the termination of the Beauty by Boozt store in Copenhagen. With new local outbreaks in the southern part of Sweden, we have on a voluntary basis, decided to close our Beauty by Boozt store in Malmö temporarily since the authorities currently urges the population not to visit physical stores and shopping malls to stop further spread of the virus. This will have a negative effect both on net revenue as well as profitability in the fourth quarter as we will continue to pay full salaries to our employees, rent and other operating costs, while keeping the store closed and not accepting any subsidies from the government. The exact amount remains to be seen since we will keep the store closed as long as we deem necessary. However, we don't see a risk that the impact will have material effect on the group. Our 2 Booztlet stores in Denmark remains open for now, but we follow the local development closely. Excluding this factor, we expect that the Other segment to be around breakeven or slightly positive going forward. Moving on to the next page. We see the development of the cost ratios in the third quarter. The fulfillment cost ratio decreased with 2.9 percentage points to 11.6% and with 2.4 percentage points for the first 9 months. The decrease both in the quarter and year-to-date was driven by operational improvements and positive effects from our proprietary warehouse management system. In addition, we've seen slight improvements in distribution cost set up due to contractual improvements and optimized allocation between distributors. The lower returns as well as general scale effects also had a positive impact on fulfillment costs. The marketing cost ratio was unchanged at 11.4% in the third quarter. For the first 9 months, it decreased slightly with 0.3 percentage points to 9.7% as customer acquisition costs were lower in the second quarter. The adjusted admin and other cost ratio decreased with 0.9 percentage points in the quarter to 9.1%, driven by leverage on staff costs as well as lower cost for physical stores. The adjustments in the quarter consists of share-based payments related to the group's LTI program. For the first 9 months, the adjusted admin and other costs decreased with 0.9 percentage points to 9.5%, driven by general scale effect as well as lower losses in the physical stores following the relocation of the Beauty by Boozt store. The adjusted depreciation decreased slightly to 3.3% in the quarter, while it was unchanged for the first 9 months, negatively affected by the revaluation effect of SEK 5.5 million for the Beauty by Boozt store lease contract. Moving on to the next page. We see the significant improvement in the net working capital, that decreased from 11.2% to 0.3% of last 12 months net revenue. Net working capital was also lower than the previous all-time low, 2.3% in the second quarter. The decrease is adjusted in the second quarter, mainly driven by the lower inventory level and higher accounts payable. Our inventory level is affected by the strong sell-through in the second quarter. Our inventory turnover is also affected by fewer average days in inventory as return rates are lower, sell-through is strong, and we have a very low -- we have very low levels of slow-moving items, and Booztlet representing a larger share of sales. Higher than normal level of in-season buys is also a strong contributor to the net working capital improvement. During the late summer and fall, we've seen delays and in some cases, also cancellations in deliveries from suppliers, while sell-through of the autumn winter seasonal goods for 2020 is stronger than last year. The delays we've seen affected our inventory position, and we believe also put limits on our sales in the third quarter. During October, our inventory position has been built up to an acceptable level even if we would like it to be even higher. Going forward, we do expect to see an improved net working capital compared to what we've seen historically. However, we don't expect it to be at low at the levels we've seen over the last couple of quarters when we look 6 to 12 months ahead. The reason is that we expect that in delivery patterns for the spring summer season 2021, will look more like they have done historically, and in-season buys will constitute a smaller part of the total inventory than it is right now. This is needed if we want to make sure that we can capture the full growth potential next year. The operational cash flow was a positive SEK 160.2 million, that is to be compared to a negative SEK 24.3 million last year. The improvement was driven by the improved operating profit and working capital improvements just mentioned. Looking at CapEx for the period, we see that the capitalized development cost of SEK 14.8 million is on the same level as previous quarters. In relation to CapEx of tangible assets that mainly is related to the first phase of AutoStore 4, we are building in the Boozt fulfillment center, we see that the investment of SEK 28.8 million was significantly lower than last year. So far, 2020 has been a hectic year for us. Not only have we dealt with the operational challenges from the low visibility on what effects our business will face during the corona pandemic. As we set out during the fourth quarter last year, we also put a lot of work and efforts into improving our operational processes to increase profitability and operational efficiency. This means that we are slightly behind our CapEx plan for further automation expansion, and we are currently running at close to full capacity. The first phase of AutoStore 4 is close to being finalized, and the total investment is expected at SEK 48 million, including the CapEx in the third quarter. As a complement to AutoStore 4 first phase investment, we expect to invest approximately between SEK 30 million and SEK 40 million for additional robot spends and other equipment that are expected to take place during the fourth quarter and the first quarter next year. For 2021, you can also expect further build-out of AutoStore 5 as well as fixtures for our new warehouse building. Looking ahead, we expect that CapEx will be around 3% to 4% of the total revenue, where 1% to 1.5% will be capitalized development costs. So this concludes the financial update. And I would now like to hand back to Hermann.

[Hermann Haraldsson, Co]

Thank you, Sandra. And just again to reiterate the outlook for the full year, which kind of we have 2 months left, but 2 very, very important months. In December, we expect to be in the upper end of the 20% to 25% range and to deliver an adjusted EBIT margin of between 5.5% and 6.5%. So this concludes our presentation. So I would like to hand back to the operator for questions.

[Operator]

[Operator Instructions] First question comes from Niklas Ekman, Carnegie.

[Niklas Ekman]

Yes, one question here really on the COVID-19 impact. You touched upon this in the presentation, of course. But I'm curious about what we should view going into 2021, given that you've seen the significant boost to earnings from campaign buys, you have seen strong growth in categories with low returns. And your operating margin on a rolling 12-month basis is now at 6.3%. So that's above your 6% target. Do you think it's going to be difficult to sustain this level of margins going into 2021 kind of post the pandemic? Or do you see enough driver here to sustain or even boost the profitability further?

[Hermann Haraldsson, Co]

Yes. Niklas, this is Hermann here. Yes, as Sandra was saying that I think she mentioned that most of the improvement in gross margin for the year is probably due to COVID and also some operational improvements. So going into 2021 we shouldn't expect kind of the same tailwind. But of course, we think it's too early to say something about it, and we will, of course, elaborate in February. But again, we have no ambitions in kind of expanding on the EBIT too far. We will rather grow and check the growth opportunities. So you should not expect us to accelerate the EBITDA and that some of the EBIT improvement is due to the COVID-19 epidemic.

[Niklas Ekman]

And on that topic, maybe you have had some inventory issues here. And you managed to mitigate this with a lot of campaign buys. But what do you see in terms of your full price sales? I mean are you now planning for much bigger buys of your regular assortments going into coming collections?

[Hermann Haraldsson, Co]

Yes. This is -- of course, it will still be a combination. Of course, we are planning for an increase in regular buy. As we can see that we have attracted a lot new customers, and we expect them to behave like previous customers. At the same time, we also can see that there is a lot of inventory in the market. It works quite well with our daily trading as well as Boozt, getting access to inventory. So kind of -- I'm not saying that the level of campaign plan will be the same ratio as in 2020, but It will be definitely higher than in 2019.

[Operator]

[Operator Instructions] We have a question from Michael Benedict from Berenberg.

[Michael Benedict, Analyst]

Just one question from me. Just looking at your FY '20 guidance, I think even the upper end of the margin guidance implies Q4 margin is just flat year-on-year. I wondered what is driving, what seems to be quite a conservative guidance.

[Hermann Haraldsson, Co]

I wouldn't say it's conservative, the guidance. We're still lacking in November and December, which are very, very important months to see, and it's difficult to kind of to know. We also did some small changes in some of the write-down agreements we have with the brands that we are -- want them to kind of follow when the actual sales are. So some of extra income we had in Q4 last year is moved into Q1. But we think still it's quite -- it's a realistic and not overly conservative if you ask me.

[Operator]

Our next question comes from Daniel Schmidt, Danske Bank.

[Daniel Schmidt, Research Analyst]

Just a follow-up question on your comment when it comes to the EBIT margin and the boost that you've seen from COVID-19 on the gross margin this year. At the same time, you are saying that the fulfillment improvements are not really sort of related to COVID-19 and you also have this insourcing when it comes to the warehouse staff, running into '21. How does sort of the positive impact on the gross margin stack up against the further internal improvements that you have ahead of you on fulfillment going into '21? What do you think is sort of the net effect between the 2?

[Sandra Gadd, Group Chief Financial Officer]

Well, I think that's very hard to say right now. We will -- once we have concluded this year and see how the gross margin end up, full year, we can kind of do the plus and minuses. But looking at the fulfillment cost, we are -- we, of course, expect to see some improvements as we do the in-source. And -- but we can see that the things we have done has developed faster than we thought. And of course, there are some scale effects in that as well.

[Hermann Haraldsson, Co]

But if we can -- if we kind of give a rough estimate on what has been the EBITDA impact of COVID, it's probably around 1 percentage points. That is -- that is our best estimate for this year.

[Daniel Schmidt, Research Analyst]

And when you sort of compare that, what you think you can do in terms of improvements on the warehousing -- is that sort of the equal amount, or is that a fair guess?

[Sandra Gadd, Group Chief Financial Officer]

Not really.

[Hermann Haraldsson, Co]

We had a lot of gains by optimizing our operations. This year, obviously, now that we're no longer paying a margin towards that, of course, we'll create some savings, but it will not be in the same range as the COVID-19 effect has been.

[Operator]

We have a follow-up question from Michael Benedict from Berenberg.

[Michael Benedict, Analyst]

Just one more from me. I wondered if you could give any color on how trading has developed over October? And has it been broadly in line with what you've seen in Q3 or is it stronger?

[Sandra Gadd, Group Chief Financial Officer]

Well, it has been kind of strong and that's why we also are more -- we have a better feeling for the full year guidance and that's why we upgraded that. So it's developed well, and we can see that the sell-through of the [ AV ] season is very good, and it's better than last here. But of course, it has some limits on the delays on the in-deliveries we've seen. But now we picked up and we -- we're in a very good position now for November and December, which, of course, are huge months for us.

[Operator]

[Operator Instructions] There are no other questions at this time. Please go ahead, speakers.

[Hermann Haraldsson, Co]

Okay. As we have no further questions. So thank you for joining the call. And I guess that we will speak within shortly. Thank you much, and bye-bye.