Farfetch Limited
Q1 2021 Earnings Call Transcript

Published: 13 May 2021

[Operator:]

Good afternoon. My name is Christine and I'll be your conference operator today. At this time, I would like to welcome everyone to the Farfetch First Quarter2021 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. I'll now turn the call over to Alice Ryder, VP of Investor Relations. Ms. Ryder, you may begin your conference.

[Alice Ryder:]

Hello and welcome to Farfetch's first quarter 2021 conference call. Joining me today to discuss our results are José Neves, our Founder, Chairman, and Chief Executive Officer; Elliot Jordan, our Chief Financial Officer; and Stephanie Phair, our Chief Customer Officer.

[José Neves:]

Thank you, Alice and thank you all for joining us today. I'm very pleased to report that the strong momentum we had exiting 2020 has accelerated into 2021 with a significant boost in both digital platform and group GMV growth. In Q1, group GMV grew 50% year-on-year with digital platform GMV growing 60% to exceed our previously provided guidance. Based on the continued strong performance to-date, we have also upgraded our full year 2021 outlook to expect higher digital platform GMV growth and we iterated our expectations for positive adjusted EBITDA for the year. We believe the strong momentum in our business is a reflection of the paradigm shift we have helped drive over the past year where we have seen accelerated online adoption by luxury consumers and digitization by luxury brands and retailers. We expect this will be sustained and continue to progress which is why we are continuing to invest behind our proposition as a digital enabler for the entire global luxury industry. As mentioned last quarter, we are focusing our 2021 strategic road map across five major themes of our Chapter two strategy. I will update you on our progress across the first three, strengthening our luxury partnerships China, and the luxury new retail LNR platform. And I'll let Stephanie update you on the remaining two, the Farfetch brand and unrivaled global customer experience. Starting with our luxury partnerships, we continue to build on our highly strategic relationships with our nearly 1,400 luxury brands and retailers. They are increasingly seeing Farfetch as a key partner as evidenced by the fact that total listings on the marketplace accelerated to a record number of stock units in Q1 and they're selling faster.

[Stephanie Phair:]

Thank you, José. Hello, everyone. I'm pleased to share an update for Q1 on our chapter two customer initiatives, captured under our brand and unrivaled customer experience pillars, which are aimed at growing and retaining our base of 3.3 million active consumers.

[Elliot Jordan:]

Thank you, Stephanie, and hello, everyone. The first quarter of 2021 demonstrates continued strong demand for products traded across the Farfetch platform. We delivered a year-on-year increase in GMV of 50% to $916 million with digital platform GMV growing 60% to $790 million. This has driven a 46% increase year-on-year in group revenue to $485 million and a 54% year-on-year growth in digital platform services revenue to $286 million. Alongside this growth, we have achieved stronger unit economics, delivered further operating leverage and improved our profitability position with adjusted EBITDA of minus $19 million compared to minus $22 million in Q1 of 2020. As a result, the overall financial position of the company is ahead of our own expectations and previous guidance, and we continue to remain very confident about the rest of 2021, raising guidance on GMV growth and reiterating our guidance around full year profitability at the adjusted EBITDA level. I'd like to run through some financial highlights by business segment. Starting with the digital platform where GMV growth accelerated out of the previous quarter to 60% year-on-year in Q1. This is the second fastest growth within the digital platform over the last 12 quarters. This is underpinned by an acceleration in growth within the marketplace, in turn driven by stronger year-on-year growth in orders from existing customers, the addition of 480,000 new customers in the quarter and an 8% increase in average order value as a result of consumers buying higher price point items and a higher full price mix year-on-year. This growth was geographically diverse with notably strong year-on-year performance within the UK, the Middle East, the US, particularly across the final four weeks of the quarter and Mainland, China, where we saw an acceleration of growth and further gain in share of overall demand relative to the marketplace. Unit economics across the digital platform remains strong with digital platform order contribution margin up 100 basis points year-on-year to 33%. The key driver of this improvement to margin was an increase in the first-party gross margin from 25% last year to 35% this Q1. This is a result of a higher full price mix within Browns and increasing direct-to-consumer trade from New Guards brands. We also reduced investment in promotions across the first-party and third-party proposition. Partially offsetting, these improvements were the impact of higher cost of revenue. First, higher duties and other handling charges as a result of the UK's withdrawal from the European Union, an impact from European digital services taxes and a COVID-19 linked increase in logistics cost per order. We also took the decision to reinvest some of this margin improvement back into customer engagement, which is reflected in demand generation media spend of 21.6% of digital platform service revenue versus 20.5% last Q1. This investment is on the back of, growing demand for luxury online, which translated to the highest ever number of new Q1 marketplace customers, continued strong retention and demand from existing customers, payback of customer acquisition spend well within six months, a three-month LTV over CAC ratio for the Q2, Q3 and Q4 2020 cohorts above the respective cohorts for 2019 and 2018 and a clear opportunity to develop our engagement channels on the global marketplace, particularly in China. Other key Q1 updates on the digital platform include

[José Neves:]

Thank you, Elliot. Let me close by recycling on how these results clearly demonstrate superb execution against our long-term vision, which could not have been achieved without the continuous dedication and efforts of our more than 5,000 Farfetcher's. We continue to leverage the platform infrastructure we have built to drive very strong growth for our partners deepening our relationships within the luxury industry and enhancing the proposition for our consumers as a result all of which puts us in a unique position to continue to gain share of the nearly $300 billion opportunity we see in becoming the global platform for luxury. Thank you. I'll now ask the operator to open the call for Q&A.

[Operator:]

Your first question comes from the line of Stephen Ju from CS. Your line is open.

[Stephen Ju:]

Okay. Thank you. So José, we wanted to ask you about the technology you were showing at the new luxury retail presentation at Browns. It does look like it will require retailers to invest in things like mirrors and some of the other stuff that was I think on the hangers. And clearly, they're buying into this given the announcements with Chanel and Ponton. But what is the pitch to these retailers in terms of what return on investment they can expect to see? And Elliot, should we assume that embedded within the second quarter guidance are assumptions of perhaps ongoing marketing inefficiency in your demand acquisition expense as well as what may be brand campaigns in your G&A expenses as you guys ramp up on Tmall in China? Thanks.

[José Neves:]

Thank you. Of course, it's early days in terms of measuring the return on investment. And the numbers we have from Chanel are very, very encouraging. And on the back of that Chanel is expanding to March in our boutiques as we just launched the technology in Monaco. And of course, in revenue it's only a few weeks old, but we're already seeing double-digit sales -- increase of sales coming from the Connected Retail Technology specifically. So I think the -- more important than that and obviously if we deliver consistent double-digit boost to any retailer that's transformational right, so in itself. But I think the key here is in a fully connected journey for the customer. So today if you're a brand or if you're a retailer, you don't know the customers that are coming into the store. You hear a luxury brand say that 70%, 75%, 80% of the customers that came into the stores are unrecognized. You don't know which products they pick off the shelves. You don't know which products they take to the fitting rooms and that is what we are changing in the industry. That is absolutely revolutionary. So with the combination of the consumer app, the shop floor app and the connected devices in the store and the Farfetch Smart Tech which is an R&D effort that we are trying we know we can identify the customer that comes in the store. We know with efforts there's an often legally retired walk-in. As you walk-in, as you browse the products in the store the smart tech picks it up. So it knows that the product is being lifted. If it's a pair of shoes its been turned around. It's moving around the store it knows exactly where it's moving and it's also is huge. So it triangulates between position in the store, product and consumer. That's completely unprecedented in terms of the data that you can get from that. And then the possibilities are a myriad of possibilities right from CRM from the fact that you as a customer can get into a store spend 20 minutes there, get out and you know what everything you touched on that store is in our wish list. And that is in itself an incredible -- the customers who piloted this couldn't believe their own eyes. Like they don't need to scan any product. They don't need to -- there's no RFID involved here. And insightful data that can be derived from this and also the user experience. So we're very, very excited. We think this brings retail to another level and is going to completely revolutionize the industry because it is a connected journey. As you come into the store the shop assistant knows what you have is it is on the website. Not just what you bought, but what you have in the wish list what you had recently browsed. So that unified view of customer unified view of products unified view of journey across off-line online monobrand, multibrand, it's I call it sometimes retail nirvana. And I think that's what we're delivering. And it's ready to go to market and that's what's getting at Printemps and Cidade Matarazzo. These are 300,000 square feet developed luxury developments each excited and we're going to have this working at a very large scale as well. So watch the space because I think there's great traction here.

[Elliot Jordan:]

Hey Stephen, I'll pick up on the marketing spend and what we're seeing there. For us at the moment we're seeing fantastic growth and engagement with the customer cohorts. I mean 480,000 new customers in Q1 which is on the back of 500,000 customers there or thereabouts the last three quarters in a row shows that the environment is right to be capturing new customers as this paradigm shift to online continues. And the results that we're seeing from the customers that we acquired Q2, Q3 last year is fantastic lifetime value. So, as I see it earlier on the 3-month LTV over CAC for these cohorts is much stronger than the equivalent cohort from the previous two years. We're seeing a faster payback on investment. So, it's really the right thing to do to lean in on these opportunities. We are seeing promo spend coming down elsewhere. We're seeing efficiencies coming through on the first-party business that's particularly around the growth in full price. And the fact that we're acquiring so many customers whilst full price mix is increasing i.e. sales at full price are growing faster than promo sales or markdown sales means the quality of the customers we're acquiring is also very strong. You might remember from our history that a customer acquired on the promo isn't as great moving forward in terms of LTV as a customer that's acquired during full price period. So we're actually seeing leaning in on this customer is the right thing to be doing right now. And as we see the momentum build in China as José touched on it before strong growth out of the US as we exited the quarter. It's really the right thing to do to capture and continue to engage with the customer base. So that's why you're seeing the, sort of, slight step up year-on-year on demand generation in Q1. And as you say in the Q2 numbers, we are reflecting that in the order contribution. It's staying relatively stable year-on-year. That's also managing some short-term challenges around costs due primarily to the UK’s withdrawal from the European Union and our challenges around duties and handling costs that we're seeing across the coming weeks but also reflects this investment in the customer. And then in terms of brand as Stephanie said earlier on, really good, sort of, early results coming through from the brand campaigns and the work that the team have done to refresh the Farfetch proposition with customers. So again, leaning into that as we move forward which is in the SG&A numbers for Q2. And that's what sort of reflects the EBITDA position just being marginally hit year-on-year as we move towards full year profitability over the coming three quarters.

[Operator:]

Your next question comes from the line of Lauren Schenk from Morgan Stanley. Your line is open.

[Lauren Schenk:]

Great. Thanks so much. Elliot, the regional performance you gave in your prepared remarks was really helpful. It sounded like the US accelerated in the month of March. Curious, if there's anything you can sort of comment on in terms of what you've seen regionally in April and early May. And then generally, sort of, performance in regions or areas where stores have reopened? And then one, sort of, modeling question. Any way to sort of, help us quantify how much anniversary-ing the harrods.com and offwhite.com will have in terms of impacts on the second quarter digital platform growth that would be great? Thanks so much.

[Elliot Jordan:]

Sure. Hi, Lauren, great question. So, yes, we're very encouraged by the regional data. So China accelerating of Q4 into Q1, clearly is a good sign. The UK was particularly strong all the way through Q1, obviously, starting to reopen in April retail locations here in the UK. So we continue to drive strong growth even after that reopening. And the US, sort of, the last three weeks or four weeks out of the quarter was particularly strong and that did carry through into the early parts of the quarter that we're now in. So we're seeing really good strong growth continue into the quarter. Hence why the guidance of 40% to 45%, I think, is slightly better than most numbers in The Street. And what I think is really key is that it's all about full price. So the full price offering the Spring/Summer 2021 collections that we have on the platform doing superbly well. Where our sellers have linked into their offering they're being rewarded with very, very strong growth. So full price growth is up over the overall average. Year-on-year our stock value is up something like 58%. So we've got a lot of stock going into the campaign over the coming quarter. And so we're very pleased with what that means. Plus also the backdrop is much stronger. We're definitely getting a sense from customers that although retail locations have reopened they are still shopping online. This paradigm shift to online is here to stay. They're enjoying the convenience, the selection and the speed of service that our logistics team is able to offer to customers. And so we're seeing continued online demand even though store options are there now for customers. The same in the Middle East, we've seen good strong demand across the quarter from Middle East even though stores have been opened there. So I think overall there's plenty of share to go around as luxury really, sort of, starts to grow across the rest of the year. In terms of the question about modeling that is broadly the step down from 60 to the 40s from Q1 to Q2 is by and large their annualization of Harrods and offwhite.com. I'm very confident in how the marketplace is performing and the other FPS clients that are on a like-for-like basis as José said continuing to deliver very, very strong growth. So that, sort of, step down that we're seeing from Q1 to Q2 is all about now becoming more like-for-like.

[Operator:]

Your next question comes from the line of Oliver Chen from Cowen. Your line is open.

[Oliver Chen:]

Hi. Thank you. The Tmall early reads are very encouraging. What are your thoughts in terms of how you'll think about that assortment from these learnings, your loyalty approach to this customer base and also the manifestation of the Farfetch chat relative to accessing Farfetch through Tmall? And Elliot would also just love your take on AOV going forward and how that dynamic may be impacted by both the attractive new customers and as you think about apparel and product mix? Thank you.

[Stephanie Phair:]

Hi, Oliver, it's Stephanie. Thanks for your question. Yes, we are very encouraged by the TLP results. And whilst it's early days, I think, we have some good indicators to be positive. I think going back what we have to think about is really that we have a very strong stand-alone business in China. The Farfetch app standalone in China is a really compelling proposition. We have all of the luxury brands on there. And so the way we're thinking about the Tmall app is really as a complementary business. So I think as you pointed out, the idea is how can we really build this pipeline of loyalty and this virtuous circle between these two channels. And I think this is standard practice in China. The Chinese consumer functions on multiple channels. The -- our team is used to working through multiple channels and thinking about how to attribute. So it really is about looking at results, learning how to play that game. It's as José mentioned in his script, it's really about learning how to build our business on TLP. But we're also thinking about very consciously how do we segment that customer base, how can we speak to different audiences. So we should really think about our own Chinese app and how this can really be upside and complementarity from a customer standpoint.

[Elliot Jordan:]

And just on AOV, I'm very optimistic about AOV if that's the right word as we move forward. We -- as I said earlier on, the full price mix coming through very strong and customers clearly buying into categories that have a higher average selling price. You'll know all of this time last year, people were in the stay at home casual wear, relaxed fit style clothing, which obviously comes at a lower average selling price. We are seeing customers buy into the more going out event-driven fine tailoring dresses and those higher price point categories within clothing, which is up above the overall average in terms of growth. What is leading our growth -- or the highest category was actually watches and jewelry. So we again had triple-digit growth within watches and jewelry, which obviously helps push the AOV up as well particularly in the fine jewelry section. And in children's, we are growing very strong and accessories also growing very strong. So we're very optimistic that AOV should be positive as we travel through the rest of the year.

[Operator:]

Your next question comes from the line of Douglas Anmuth from JPMorgan. Your line is open.

[Unidentified Analyst:]

Hi. This is Katie on for Doug. Thanks for taking the question. Following up just on Farfetch launch on Tmall Luxury Pavilion. Just curious what are the areas that will strengthen to make this a meaningful channel in 2022? And do you have a view of longer term, on which will be the bigger channel? Thanks.

[José Neves:]

Yeah. I think we are really, really excited, first about China in general. As you know China will be absolutely critical for luxury and Chinese customer size will be 50% of this industry. It is the engine of growth of the industry today already, and we are winning in China. We are growing very fast. So China is growing faster than the U.S., our largest market faster than the average of the marketplace primarily through our own channels. But we see this as a multichannel approach, right? So which had -- we are very successful on WeChat. We'll continue to launch innovation -- innovative products there. And that brings us to Tmall. We are really, really excited about these early results two months after we launched. We're seeing really real engagement from customers. So the number of customers that visited our TLP storefront, whilst the same that visited our app so the traffic is definitely there. We see complementarity in the demographics and more female Tier 2, Tier 3 customer. And what's very exciting, the customers are engaging with brands that are only on Farfetch in China. So I can tell you, for example, brands like Jack Daniels, Marine Serre, Thom Browne, they are in our top 10 in on Tmall, which is very, very encouraging because it’s not easy to open operations in China and it is not easy to be on Tmall, you need a Chinese entity, you need a team take NGG, right? NGG has much larger brands than these brands I'm talking about. And they weren't -- if you know they are not on Tmall directly or in China they will be probably. So I think this is really, really exciting because it shows complementarity. One of our big goals was to build the brand in China. Chinese customers they don't search for products when they are shopping on Baidu primarily. They search for fashion in the fashion category, primary they search on Taobao, which is Taobao, Tmall same app. And so in terms of brand awareness is critical and we're seeing very, very encouraging signs. And in terms of sales, as we always said, we're going to continue to build momentum to make this a meaningful channel for our Farfetch China business in 2022 and beyond. We're already seeing multiple times the sales that we saw in a similar storefront we had with another player in China last year. And we're -- it's all on track. So very, very happy and on the back of that, Alibaba is also accelerating our partnership. We've just agreed to launch an innovation lab for the acceleration of luxury new retail in China which is very, very encouraging, so incredible news, coming from China overall.

[Operator:]

The next question comes from the line of . Your line is open.

[Unidentified Analyst:]

Hey, thanks, everyone. Elliot, just two questions, on the brand platform revenue guide for this quarter, I understand the shift to fall went there. Can you maybe just help us understand could you quantify the shift, or maybe, let us know what you're planning for brand platform GMV in the third quarter just to help us kind of understand that smooth that out. And then, could you just talk real quick about the fully diluted share count and the uptick in Q1? Is that from the converts? Just trying to understand what happened there. Thanks.

[Elliot Jordan:]

Yeah absolutely, hi, I mean, broadly what we're seeing is -- let me just talk to you sort of what's happening with the brand platform. So effectively, we're able to with our supply chain now deliver product to our retail partners in season, which means that, the prior season has a longer selling window. The stock isn't sort of backing up to enter the stores. And therefore, there's a longer period for the businesses to sell-through product. And not mark down as early as they previously had done. This is something that we're seeing more broadly across the industry. And we're really pleased that New Guards Group has able to really adopt this with their customers. And it means that, the product is fresh for the in consumers in season. The drops are really landing and ready for sale. And again, that's allowing the retailers to drive full price mix. And ultimately, strengthen the brand's overall perception within the market. And so what we're seeing I, compared to last year the drop that we're talking about is effectively moving into Q3. So we would normally expect, as we saw in Q1, a slight increase year-on-year in terms of sales, so sort of 3% to 5% across the whole season. Clearly with the number that I've shared for Q2, the bulk of it will move into Q3. So that would be the number that you need to put in your model for Q3, is to make sure that the overall two quarters drive a sort of up to 3% 4% 5% sort of year-on-year growth. In terms of the dilution on the share count, so for the first time obviously, we're sharing this because of the profitable position. We're seeing the weighted average number of basic shares at $355 million. That goes up to $452 million on a diluted basis. And the rift between that is effectively by a margin of three convertible notes. So the February notes $20 million there. The May 2020 notes, is $25 million of dilution. The November notes $18.5 million of dilution. And then on top of that, we've also got the aggregated dilution from employee share option, schemes which is roughly, $31 million $32 million. So that's the reconciliation there. And those option schemes, as I said are cumulative effectively over the last sort of three years or so of grants being made to colleagues in the Farfetch for all long-term incentive plans, which obviously aligns motivations of the team to shareholders.

[Operator:]

We have time for one more question. The final question will come from Louise Singlehurst from Goldman Sachs. Louise your line is open.

[Louise Singlehurst:]

Hi. Good evening everyone. Thanks for taking my questions. I'm going to have a stab at guidance, if I can. I think if look at the customer base it had lots of very encouraging trends about obviously the run rate. If we look at the numbers, you got a big increase of 3.3 million versus 2 million a year ago. I guess, what can you tell us about the cohort and maybe insight from access? The guidance I guess, even though has been increased tonight still looks quite conservative as we think about that run rate and the new pace of active customers for each quarter. So I'm just wondering, if we're not thinking correctly about average orders the levels of returns in that? And the second question I had was just on, China for Jose if I may. We talk a lot about the big brands and access to mega brands and the inventory levels. Are we missing a trick here is, bigger opportunity about that long tail of the private brands with really net distribution, I think you alluded to some of the smaller brands having a disproportionate impact up to a billion on the early reads. Thank you.

[Stephanie Phair:]

Hi, Louise, it's Stephanie. I will take the first part of your question and then I'll hand over to Elliot on guidance. But yes, you're right we have the largest number of active customers 3.3 million. We have grown 0.5 million over the last sort of three successive quarters. So we're really seeing momentum there and as always it's a balance between acquisition and retention. But the good news is that our retention efforts are aided by the fact that this is a high quality customer. This is a customer that we've acquired through full price sales. We've acquired them often through high value products, and we're really seeing those results. And so in terms of our retention efforts, we think about sort of a number of measures of which access is one of them. We have many, many approaches to retention, but access is probably the most sort of visible and sign posted for the customer. And since you specifically asked about access we are seeing improvements there. One measure we look at is order per customer. And actually year-on-year we've seen a 13% increase from access members who year-on-year on their orders per customer. So, a good way to drive sales from the same customer base. We're also seeing other efforts such as push notifications and customers who have essentially opted in with us to access through the app leaning into this value exchange that we're giving us. So we are very confident and I think that is built in. And we see this momentum continuing both on new customer and on a really good metrics around retention repurchase rate long-term value very strong LTV to CAC ratio.

[Elliot Jordan:]

And then in terms of sort of looking forward, Louise, I think we're building in what we're seeing is a mix of obviously those large cohorts from last year. And as I explained on the last time, we met the dropout rate that historically all e-commerce businesses see in terms of sort of 12-month dropout from first order to retained. As Tiffany was saying, the retention is better than previous cohorts looking back, but we still have to annualize those fairly large numbers. And now that we're going to be like-for-like 500,000 new customers per quarter, yes, the number is impressive and we're absolutely delighted to be continuing to capture these numbers, but that will need to offset the stop out that we're seeing and really become more like-for-like. So the number of 40% to 45% year-on-year growth for this quarter reflects all of those sort of annualization. It reflects as I'm saying to all of an increase in AOV. And obviously, strong order growth from what will be existing customers as we now go into Q2 and annualize and all those customers become like-for-like. And then obviously, as I said earlier on the FPS clients continuing to drive good like-for-like growth, but as we've not talked about any new FPS clients, there's no incremental growth in the Q2 numbers from a new FPS client to talk about today.

[José Neves:]

I believe on China, I think, your question is a great question around supply and supply differentiation super brands versus smaller brands. So let me try to give you the lay of the land in terms of our unique advantage in terms of supply in China. So we're bringing to China over 3,500 brands on our app. To be clear, the brands that you see in the UK assuming you're calling up from the UK or those calling from the US are the same brands that our Chinese customers see. So when we do a deal with a brand, it's a global deal. So the 550 direct e-concessions we have from the likes of Gucci to the Prada of this world, the Valentino's et cetera all those brands are available on the Farfetch China app. But what we bring is a unique assortment of those super brands. So we've done a SKU count on Tmall and we've expanded the SKU count in order of 7.5 on average for those brands that have a presence on Tmall, right? So what we're bringing in terms of the super brands to the Chinese customer is this incredible assortment that they wouldn't find in China even in physical stores even online. And Chinese customers said that were used to travel and go to Milan, Paris, New York they now can find these very unique products from the super brands. And that is an incredible price value proposition for the consumer. You then have the smaller brands. And we're very excited because this is really our role of connecting the creators and the curators and consumers of fashion all around the world. This is our mission. And for these small brands, you can imagine how transformational it is. With one single integration on Farfetch, they are exposed to 3.3 million active shoppers spot on in full price luxury at $600 plus average in China even higher. And they're exposed to China, not just on Farfetch, but also on Tmall. 90% of the brands we're exposing on Tmall don't have a Tmall store. And we knew those brands have traction in China because we knew it from our Farfetch China app. We didn't know how they will fare on Tmall right? So that was a question mark we didn't know okay 800 million customers a much, much rather audience are the customers going to be engaged with our longer sale offering and they are and they're actually incredibly engaged. As I said, our top 10 brands on Tmall many of those are cool small more Avant Garde brands. And of course, as an analyst and the investors on that side of the line, you would like to know also that our take rate is higher on those smaller brands, so they're more profitable for us. They're above the 30% average take rate. And I think it's all about this curated offer. And it's also all about complementarity, right? So it's a complementary channel for us, which is showing tremendous incrementality. I know everyone is focused on sales so are we, but we're also focused on that complementarity of channels and targeting different audiences and we're extremely happy with the results so far.

[Alice Ryder:]

Terrific. Well thanks everyone for dialing in. We look forward to speaking with you in a few months. Have a good night.

[Operator:]

This concludes today's conference call. Thank you for participating. You may now disconnect.