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Hello.
Hello. Good morning. Happy new year.
Exactly. Good morning, and welcome to the first webcast this year.
We are back in action.
Indeed. Indeed. I'm Jussi Tahtinen, the CEO and Co-Founder of Nitro Games. And with me, we have...
Antti Villanen. I'm a Co-Founder [indiscernible] and Chief Strategy Officer. Jussi quoted that this is our 17th year...
Yes. After the summer, we're celebrating 17 years anniversary so exactly. It's been a long time.
It's been a while.
Yes. But I'd like to say that the best years are still ahead of us. Today, we're here to deliver the results for the last quarter of 2023 and kind of wrapping up the whole year 2023 in connection with that. And then we're also going to talk a little bit about what's ahead of us this year...
[indiscernible].
Yes, exactly. And for those of you who might be new to Nitro, we are your household name when it comes to action and shooter games. We used to say on mobile, but recently, we've been focusing more and more on other platforms as well.
And last year, all of our products were following our vision with the premium shooter and action games on various platforms.
Yes, yes, that's true. That's true. And I think that's one of the biggest achievements of last year. We were able to navigate through the year with our project portfolio in a way that everything basically stands for our vision. And in addition to that, I'm extremely happy to say that we successfully managed to turn our B2B Service business into cross-platform business. So it is no longer just about mobile.
And we are capable of utilizing our history as we started as PC developer. We did some console games. And now it seems that, that plays very well in our benefit, as the games are going into the cross-platform and multi-platform direction.
Yes, yes. And this time, we're not going to be boring you with sort of what's happening on the market in terms of slides and numbers and stuff because we are sure that you all know how were those stand at the moment. So overall, the whole gaming industry wasn't growing last year. It was a slight decline.
Many people call that a COVID hangover effect because during COVID things went out. Mobile games is still roughly half of the market, but I think that's really interesting when you think about Nitro in that contest is that that shooters are and continue to be the leading category. So we're very happy about that. And the whole expansion on mobile has progressed as well, as we dream of earlier so...
And it seems that our mobile shooters will be dominating [indiscernible] or category going forward. A lot of AA and AAA shooter IPs are entering into the mobile space also.
Yes. Yes.
And that is natural place for us to shine...
Yes, Yes. And something that's still not resolved yet based on whether we are going to be seeing this type of duality on the market that we're seeing now, where we have big brand cross-platform shooters that also have a mobile extension or a mobile version. And in addition to that, we have mobile exclusive titles. For example, Autogun Heroes is our own game so it's going to be interesting to see if this duality, in a way, continues moving forward...
I have a feeling that there might be games that are starting on mobile, so mobile first and then expanding into those -- into the PC or console.
So Nitro Games, action and shooter games, that's us. And then in terms of recent highlights, I'm sure you've probably already seen the report, and we also this time published some of the key figures in advance. And the big thing during the fourth quarter last year was that we turned Nitro Games on black.
It was a very big milestone for us and we are very, very happy about that milestone.
Yes. And if you remember, our theme last year was all about step by step towards profitability. So that's what we achieved during the fourth quarter. And it was a result of both top line revenues growth and also careful cost control that we continue doing that...
And that was a very good solid foundation for '24.
Yes, yes, especially the cash position, means that we have pretty much options how we want to go about this year now. And we'll talk more about those things later on in the presentation.
In terms of significant events during the quarter, obviously, the agreement with Netflix was one of those because it was the biggest agreement that Nitro have ever done in terms of order value. And it's a project that we're very excited about. Even though we had talked about it too much publicly yet, but it's a spot-on match to what we want to do.
Exactly and hits to our vision very, very well.
Yes, yes.
Off of the period, there has been also some significant events. And I think one being that the that Mr. Jussi Immonen has taken a role more in the commercial side of the business, now that he and his team has been building the marketing and publishing capabilities to Nitro for several years. Now it's time to start capitalizing those and commercializing those, and there has been first results out of those activities already now in this year.
Yes. I'm really happy with how we focused on finding and securing the partnership for Autogun Heroes. We're going to talk about Autogun Heroes in more detail in this webcast as well, but that was one of the big things for us after the reporting period to get the game out from the launch phase and figure out the best strategy for the live operation space. So that's something we're super excited about.
Also deepening into collaboration with one of our key customer and partner, Digital Extremes, and we secured a new continuous deal with them and continuing and deepening the collaboration with the Digital Extremes, and that's something that we are very, very proud and happy and that shows that what we are offering is something that resonates very well on a big companies that have a big IPs like really, really huge champions.
I'm proud of that partnership because it has been super demanding for Nitro in terms of us flexing our muscles and delivering high quality, especially when it comes to the technology side of things and getting -- well, you will see things when they actually come live -- yes so that's something that I'm sure it is a bit thing that we see many partner developers. Overall, as a result of the fourth quarter, we would, of course, want to thank you and with you, meaning you might be a co-founder and all our employees, past and present, and all our partners, all our shareholders, stakeholders. So it's been...
Couldn't be possible without the continued support of -- from all fronts. So big thank you for -- to all.
And then let's go forward in terms of this year.
We always have kind of focused for the year. And last year, it was all about towards profitability, and that was something that we then achieved on the last quarter. And now we are having to new theme of the year and you want to tell...
Yes. So the theme this year is stable growth. And what that means for us is that we're obviously seeking stable growth. And the reason why we wanted to put the word stable at first is that this year for Nitro is all about prioritizing stability over overly ambitious growth things.
This -- in terms of context, when we look at this, how we put it on the time line with our strategy makes perfect sense because last year was all about getting our portfolio to be aligned with our vision, like we discussed earlier. We succeeded with that. While at the same time, making sure that our finances are aligned with what's happening in the world at the moment.
So we want to make sure that we're in position that we're not stressed in terms of funding or anything like that. So we want to make sure that now that we build the foundation, we have achieved profitability, we continue building on top of that.
And that's not to say that we slowdown in any way, but we want to make sure that we take things carefully because based on everything we are seeing and hearing, it looks like the world around us, it's not exactly necessarily a happy place this year. So there is still probably going to be turbulence and bad news in the industry overall much likely what we already have from the industry earlier this year...
There are some highlights here and there. Some of the big companies have been doing a little bit better last year, but still I think looking for stability is the way to go and growing on top of that. And I think those two combined is the perfect thing for the -- for this year, especially for us.
I think our team composition on how we have built the whole team structure with our very solid core internal team and a partner network around that. It's something that supports the team and we have a scalability component within our external partners, and then we have a very solid core internal team.
Yes, yes. And I think that's the ideal foundation that you want to have for this year because you want to make sure that you are in a stable financial position. I think our cash position at the end of the year means that we are stable on that front as much will be. The business has now improved, will be super careful with the costs and kind of taking things step-by-step to the right direction.
And now looking a little bit further like even beyond 2024, we believe that as soon as this year is done and the industry again stabilizes a little bit more, the ones who come out from this year strong companies are going to be the winners for many, many years. So we, of course, want to be one of those.
And then if you look at our setup, where you mentioned the team being in a super strong shape. During last year, overall, we continued expanding and building on our global scalable talent pool. And this is something that we have discussed about earlier, but we want to repeat this because we think that this is the secret sauce...
Secret sauce and the unique and how we have also scaling up and sometimes scaling down the team sizes. And it's very well also received within our partners. And we thought that years back that there could be a little bit objections from the partners, but now everybody is more or less try to copy our model and embracing our model as it creates a solid risk management tools also for us.
And essentially, how this thing works is that we have 2 studios in Finland. We want to keep our core team as stable as possible. We focus on having the best professionals, usually the project leads and senior developers and senior artists and senior designers in the in-house team. Then when we start a new project, we bundle together our in-house staff and then people from our external partners network.
And that means that we are able to scale up and down, like you said, depending on what the need is, but also to make sure that we have the best possible talent available and also gives us conveniently the ability to work on multiple time zones. So all of this is perfect for us in terms of the type of business that we did...
And multiple projects. We see some of our peers having a challenge of having several projects at the same time, but that has never been kind of challenge or problem for us because of the model.
Speaking of projects, let's have a look and see. So one of the big things coming out from last year was that we now have our project portfolio, which is fully aligned with our vision of action and shooter games that's what there is. Autogun Heroes is now something that we're busy moving from launch phase to the live space. We're going to talk a little bit more about that in a second. So let's leave that for now.
In our games business, we also have NERF: Superblast, our partnership with Hasbro where we have licensed their [indiscernible]. And that's a game that we intentionally reduced investments on last year. This was part of the cost control and us focusing on the Autogun Heroes. And as a result, NERF contributed a little bit less than 25% when it comes live games business revenues last year in total.
And now this year, from the beginning of the year, we intend to keep things in the same way. But when we look at the games business as a whole this year and moving forward, we're seeking to do two things. One is that we're seeking to commercialize anything and everything in our game portfolio, also some unannounced things that we haven't yet announced through partnerships. So that's a mix...
And also some of the back -- couple of things, and we have some opportunities on that area. And Immonen jump in commonizing these things so it's a natural fit as he has very wide network within the industry, and I'm quite sure that we can see more about this kind of deals happening within our games business also.
Yes. And we are seeking to find clever ways of increasing the size of our games portfolio without going too heavily into an investment mode because we understand that in this climate, nobody wants to see too heavy investments at the moment, leading into losses or anything like that. So we want to be clever about how we handle things financially on that front.
On the B2B service business side, we're super proud to work on Warframe with Digital Extremes and deepening that collaboration and it's been already quite a long journey. And hoping that we will see also where that journey leads us. But what is kind of obvious already now with the extension of the collaboration, it is a kind of long-term collaboration. And that is naturally something that we are looking from Netflix cooperation also.
And it's easy to see that as the deal value was such a big that it will last for some time, the collaboration. And on top of the existing partnership, we are naturally busy looking for new partners and new clients and our PD is very active on the market looking for the opportunities.
Yes. And if we would summarize our plans, how this ties into the stable growth in this year is that with the existing two big partnerships with Digital Extremes and Netflix, we're seeking longer term. We're seeking to make sure that we deliver quality and make the most out of those, much likely we have done thus far as well.
And on top of that, we do believe that no matter what's happening in the world, there will always be opportunities in the business development and new approaching opportunities for the best companies. And I think we have shown over the years that if there are deals available, if there are new opportunities available, we are there to fight for those. And that's something that we definitely continue doing this year, like you said as well.
And kind of reference value from the previous and existing products, it's kind of growing all the time, as there are kind of AAA games, et cetera, like Warframe that we can say that we've been working on such a big game. Those reference value is playing on our benefit when we are talking about new bigger projects.
Definitely. And then we've gotten a lot of questions and comments and feedback and input about Autogun Heroes over the -- for many months now already. So let's talk a little bit about that and...
We are basically in a transition period from the launch phase to live op space. And it's like almost any transition period, lots of unknowns, but then we've been capable of tackling several of the main risks already with -- now with the great partnerships and also with the KPIs that we have been able to collect from the market. And I think it will be a smooth transition from the launch phase to the live op space.
Yes, yes. And quite a lot of the questions actually that we have received have been about that. How are things going? Are they going as planned and like where are you guys going and those they of things. And that's why we thought that we want to show again this [indiscernible] how we've spoken about this before. But with Autogun Heroes, we have road map for many, many years. It's a long-term mindset that we have with that one.
But up to this point, so far, where we're going right now is the transition base between these two Autogun Heroes. So we're busy completing the launch phase. What that means is that we have already done the scale up of the game earlier. Last year, we've done -- not done, but we've seen evident growth as a result. And we'll be further developing the game.
With the real data that we are getting from the real players, not just our design or plans. Actually, the players are affecting what are the features and balance that the game needs to be scalable.
Yes. And of course, it's fantastic to see revenue growth during this launch phase, but that's not the real beef. The real beef of the launch phase is to prepare the game for the long run, make sure that we understand the customers in larger scale. We understand the customers in longer life cycle as well, going first to 30 days where we were before the launch phase and expanding to 60 days, 90 days, 120 days and so on and make sure that we know what we have in our hands so that we can come up with the audio setup for the live op space.
Exactly. And even though now we've been working for a few years, but the life cycle of this kind of game can be 5 years or 7 years on a live operations so -- in a sense, we've been working with the quite a long time already, but still it's like only the scratch of the whole life cycle and now we are actually entering into the live phase of the game.
Yes. And if they are following the game closely in our game channels like social media [indiscernible] you will see that there's still some key features coming up at the game now beginning of this year or so. Cool stuff.
But if we look at the launch phase, so let's first summarize the launch phase present then discuss about the life op space after that. So we summarized the launch phase, we're approaching the end of that. And what that means is that we still have some updates that we're going to push out. We still have a little bit of data to collect, but make sure that is already there. And we have some preparations for the life phase, which we will talk more about on that once we get to the next slide, but...
It's also good to remember that even though we have like a 1 million installs this far, but there are lots of installs that have -- came on December and January and very late on launch phase. And those will keep all generated -- keep generating the revenues going forward. Even though that we are moving towards the life phase, still those players are out there and they are contributing into the game.
And basically, everything that we saw during the launch phase was somewhat well in line with what we thought and expected to see earlier before the launch phase started. And something that has been characteristic for Autogun Heroes throughout the life cycle of the game has been recognized retention curve.
When we started with the game, we had really nice early retention curve, then we expanded to the 30 days and so on. And now you can see how it spans all the way up to day [ 120 ]. That does not, however, mean that we would be satisfied with it, and we are, of course, seeking to constantly improve on that front and boosted up step by step like we've done thus far moving forward. But that's one element of the game that we have been pretty happy with.
And then the second element that we have been happy with is the monetization side of the game where Autogun Heroes definitely monetizes pretty early on. It monetizes nicely both [indiscernible]. So it means that there's a lot of flexibility when it comes to different type of audiences in the game and so on.
And the numbers that you are seeing on this slide, these are not the summary of the launch phase, but exactly like Antti said earlier, those -- some of those players only just arrived in the game just now, and will, of course, continue playing on spending. So they still have maturity of their life cycles still ahead of us...
There are like millions of data points. Naturally, there have been something that we are more happy and there are something that we are -- improve some data points, but there has been also some surprises like a very good performing markets that we never could have thought that there are some specific market that is performing way better than others and there has been also this kind of like a good surprises on our performance...
Yes. And now when we move to the live phase, the big decision that we have now done is that we want to move to the live phase together with a partner. And why we want to do that is that we want to make sure that we have a seller for the game that allows us to make the most out of the long-term potential we are seeing in the game for many, many years to come, hopefully. .
And we want to have a partner who can share the risk so that we can protect our financial short term, short term meaning this year, and that also allows us to scale up the game hopefully larger and faster than what we could do with our own financials. So super simplified all of that means that we need somebody to deliver us downloads.
Part of our process is that with any game that we have, we started for big partnerships and different kind of [ UA ] funds and what was quite early -- what we have early -- initial data we already start to discuss that so that we have these kind of things coming up. And with Autogun Heroes, there has been lots of interest.
The whole period of evidence that we've been testing the game and getting some results, and there was a huge amount of interest towards the game. And we could -- we have had opportunity of being quite demanding on our negotiations and even a little bit tricky. And that resulted us to finding the -- I think, the best possible partner for the game at the moment.
Yes. I wouldn't say that we were a little bit demanding, but quite demanding to be honest. But I think it worked because I say it's always happy if you have a lot of interest about something, but that means that you have tons of what we call people kicking the tires [indiscernible]. So you want to get rid of that as soon as possible. And the best way to do that is to put the price tag up high. So that's usually the method there.
But after all of those things [indiscernible] Supersonic from Unity, well, like I said previously, we have a product. We have a team capable of delivering constant improvements like we've now seen. We have a long-term assets so what do we need? We need downloads. So that's where these guys come in. And these guys are as good as it basically gets something on this front. So second largest in that sector. And...
And the key thing also they are part of Unity. The Autogun Heroes, they are with the Unity and there are lots of synergies also, not only the tech, but other areas also. They are being part of the Unity that we could leverage some benefit going forward.
Yes. And when we talk about Unity, I think it's good to understand that what it is true, like many people perceive it as game development engine. That's true. That's what it essentially at its core, but Unity as a company and cooperation includes many, many things like advertising networks, data users, all that stuff. So it's nicely in the ecosystem there.
And Supersonic themselves have delivered more than [indiscernible] over a period of few years. So they know how to handle that stuff. And in this agreement, of course, as always, many of the terms that we have agreed are confidential, that's the nature of the business. But the basic split is that we continue to develop the game. We continue to deliver updates, live operations, all those things that we've done thus far, whereas Supersonic is picking up the ball on user acquisition and driving downloads into the...
We are also supporting on the area that's really bringing all the learnings that we have from the launch phase and all the tricks that we have that works for the game.
Yes. And then -- as soon as those are done, then we share the good news with them. We haven't gone into details about the deal terms because, like I said, they are confidential. But as Antti mentioned, we were very big on that front.
Overall, I would say that we can be really happy and excited with the outcome of this, and especially how it looks, not just for this year, but for years to come, hopefully with Autogun Heroes. And I think it's good that we're now moving into the direction where we go forward with that one. And it also gives us some flexibility to think about what other stuff we do with our games business and games portfolio.
Then let's have a look, say, on the financials from the Q4. So as we already discussed, Q4 was the quarter when we reached profitability. And this is clearly visible in terms of the pillars here and also in the numbers. The numbers are shown in this table.
And if we were to summarize the developments with our financials last year, in a simple fashion, I think it is that we delivered growth. But then again, top line revenue growth is something we've been doing for years now. So that's part of the thing that we are already doing.
And then we've been discussing a lot about this step-by-step improvements towards profitability so that we now reach the goal in a way or milestone what we want to say, during the fourth quarter. And what's behind those numbers is simply put growing the revenues, while keeping the costs in control. And that is something that we have spoken a lot about our scalable global talent pool and how we're able to control that things.
And we will very likely to continue to talk about that moving forward as well because our intention is to keep things that way that we continue to grow our top line in a stable fashion, while we keep our cost in control.
Exactly. And it also lays a very good foundation for this year, focused on the stable growth. And I think we have laid solid and strong foundation for that one.
Indeed. And then we wanted to also give you a sort of a little bit higher level like not just this year, but this year and beyond, what do you expect from Nitro, what does it mean when we say we continue to live towards our vision. And also, we continue to live our vision more and more every day.
As already stated, all of our current projects are within the shooter and action category on a mobile and cross-platform. And it seems that there are bigger and more exciting opportunities in that area coming up all the time. Cross-play -- cross-platform is something that seems to be one of the big trends within the whole market in the coming years. And our position and capabilities and also the references that we've already been operating in that area, those are giving us definitely kind of competitive edge going forward.
Yes. And the reason why cross platform and cross-play are expected to grow and what we have already seen -- what we have seen so far in the model is not because it's technically possible, but it's because it gives added leverage and added power to the brands and the beautiful thing about mobile games as a platform and especially as a modern platform is that we're able to reach out to new audiences in a different way compared to what you can do on PC and console.
And that's why cross-play and cross-platform makes so much sense for our games that are already in that mindset and for brands. And when it comes to brands, I think it's safe to say that we are working more and more with top IP. We have already done that quite a bit like work with Hasbro for quite a few years, work with Warframe, with Digital Extremes. and now with Netflix, but obviously on an IP case.
So that's something that as the mobile games marketing and the games marketing evolves, what we're seeing more and more is that people are leveraging the power of brands because there's less and less opportunities to target database.
But there's also some skill sets and expertise that you need when you're talking and operating and working with the top-tier [ Hollywood ] brands and it's not something that all of the pure game developers are not capable of handling, and it's like a commercial angle of the gaming business that you need to be capable of -- have been on those capabilities and have those discussions and understanding the IP values and brand values and also support the needs of the brands [ and all have been ] with the small part that we are operating.
And I think one thing that why we think Nitro is so good on that front is actually in our sort of DNA. And I think that this comes from you basically since when we started Nitro, Antti was leading one the biggest [indiscernible] digital marketing agency here in Finland and in Baltic countries and so on. And -- so I used to work in his company before we started Nitro Games.
And that's where I think the understanding on the importance of the branding and what it means for somebody to own the brand and control that. And I think that something that's in our DNA, here in Nitro Games as well that we respect the brands. We know how to treat them in a good fashion.
And then the last but definitely not least, that's the magic that there always has to be a little bit of innovation and stuff, even if we're working on an existing game or a project or existing brand or something, we always want to introduce a little bit of magic there. And that's where I think our experience and expertise comes into play. Since we've been doing this for so long time with so many games, we figured out that where can the magic does usually be more. It doesn't work always but that's what...
We've been seeing so many generations of platforms where we see so many generation of monetization models and whatnot. And I think we've been, first of all [indiscernible] all those years, but they're still coming out as a reliable partner for many of the big companies, bringing those small innovations that they change their category or genre or bring in something new that attracts the consumers.
Exactly. So now we've reached the end of the sort of slide deck stuff, and now we will go into questions and answers.
It was quite late today.
It was. Yes, half an hour...
Any questions...
Let's see. There's questions in email, we take these first. Are we satisfied with the sales figures from the self-publishing segment, considering the lower U.S. spend in the last quarter?
I think -- well, yes because it just shows the -- I would say, the power of the retention curve and how the players stay in the game. So when you might realize marketing expenses at some point, you then call it downloads and then those download start to accumulate revenue over time. So you essentially have a [indiscernible] way you can control your spending and costs with sort of understanding what's likely going to happen moving forward in the future.
And the next one is the Service business demonstrated solid growth in the fourth quarter, what was the primary reason behind this? I think that's two. So one is that we signed a new deal with Warframe during the third quarter, which expanded the collaboration. And obviously, a lot of that started to materialize towards the end of the year. And then, of course, we both signed and started a new project with Netflix [indiscernible] comes from those.
Then there's a question about capital expenses, how will they evolve when Autogun Heroes enters the live operations space? This is something where the power of the partnership with Supersonic comes into play. So while we do continue to invest into the game in terms of development and live operations and so on, we are no longer expecting to invest into user acquisition. So that means that there's a big part that's away from our cost base.
And there is no -- we can't see the scaling of the team significantly. Also there is a solid team that performs and can deliver all the updates and features required.
Definitely, yes. And then there's a question about the publishing agreement. Do we believe that we can begin allocating more resources to potential new games? Kind of yes and no in a way. So we don't want to portray the picture that we would go into heavy investment mode like spending a lot of money. I think to answer that, that would be no, at least for the time being. But we are definitely exploring new opportunities and new potential games and process this year.
And what we want to do it in a clever fashion because our theme for the year is stable growth. So we want to make sure that we don't go into [indiscernible] because of investments.
Let's see. There's a couple -- somebody wants to know if we expect '24 to be the record year for Nitro regarding revenues and positive reports. Also what do we expect from the partnership with Supersonic.
We don't do financial guidance. So we don't expect basically anything from '24 other than we want to continue to see stable growth, let's put it that way. And what do we expect from the partnership with Supersonic? Well, we're only getting started. So obviously...
It's a very active stuff. And they'd be very active on very beginning and the integrations and all of that is ongoing and at least what we can expect that they are very active. They are very excited about the game. And they are also doing their own transition from [indiscernible]. So we are in a very good momentum within that portfolio. So I think at least what we can expect is lots of attention and focus from there.
Yes, yes. And like always with Autogun and with anything we do on the game side, our focus is always on the long term. Of course, we pay attention to what happens in the short term, but anything and everything we do, we do to maximize the potential in the long run.
Will you make one last try at NERF: Superblast or is it the way it is? With that one, like we said, we intentionally decreased investments during last year to focus our investments on Autogun Heroes. And as an aftermath, it seems like it was very much the right thing to do.
For this year, we are exploring and figuring out what we want to do with the game. But for the time being, we will keep our investments to NERF: Superblast low. We will let you know if we come up with anything else on that front.
Then questions about Autogun Heroes and Supersonic. Has Supersonic also started or when will they start working with Autogun Heroes?
Like, Antti just said, they have been pretty active and we're busy getting things started, but these things tend to take some time. But we're on it.
What happened with the Supermassive project? Well, what happened is that we completed that project, I think during the third quarter last year.
Second or third...
Yes. So basically, what happened is -- what often happens in our B2B Service business, we start a project, we might do an expansion to the agreement, like we did with Supermassive Games and then [indiscernible] and that's it.
How much of the Netflix project will be done during '24, approximately?
Something we can't go into too much details because everything is still super classified and confidential around that project, but we are very active on that one this year and in full sort of developments with this year. So that much we can say -- yes.
Then someone wants to know about revenues thus far in the first quarter, and if we can expect black figures. No comments on that. No, we don't do financial guidance so you will have to look into our past performance and try to pick up things from there.
I think that was the last question. So thank you all for your questions. Thank you all for tuning in and...
Thank you so much.
We're now going to go and continue -- we still have 1.5 months left roughly-ish and are still some big things to achieve here to make sure that this will be a good one. Thank you and until the next one.
[Foreign Language]. Bye-bye.