ECARX Holdings Inc.

Good day and thank you for standing by and welcome to ICAREX Q2 2023 Earnings Conference Call. At this time all participants are in a listen only mode. After the speaker presentation there will be a question and answer session. To ask a question you will need to press star 1 1 on your telephone. I would now like to end the conference over to Adam Kaye, Investor Relations at ICAREX. Please go ahead.

thank you operator good morning and welcome to our second quarter 2023 earnings conference call with me today our ECORx chairman chief executive officer and co-founder Zhiyu Shen chief operating officer Peter Serino and our recently appointed chief financial officer Phil Zhu this call is being recorded before we begin the prepared remarks which will be followed by Q&A and Today's presentation will refer to both GAAP and non-GAAP measures, and also contain forward-looking statements, which are based on the environment as we currently see it, and as such includes risks and uncertainties. Please refer to our filings with the SEC for more information on the specific risk factors that could cause actual results to differ materially. With that, I'd like to hand the call over to Ziu.

Thank you, Adam. Hello, everyone, and welcome. Thank you for joining our second quarter earning course. Our momentum built in the second quarter with strong revenue and quarter-on-quarter growth margin, growth demonstrating the growing interest in our product and the demand from consumers for a safe and more enjoyable in-car experience. There are now 5.2 million vehicles on the road that incorporate our technology across 21 brands offered by our 12 automotive OEM customers. Vehicles on the road equipped with our products increased 6% from last quarter and 30% from the same period last year. Our dedicated team of around 2,000 people, including over 1,580 engineers, has firmly established e-car X as the leading tech provider in China. And we are gaining increasing attention from important automotive OEMs outside of China as well. We operate in a rapidly growing and evolving marketplace. The roll out of digital copies also increase our content per vehicle and ASP. The appeal of a company like EcoRx is that we are working in the sweet spot of automotive technology. Our marketplace is currently being reinvented and where the experience and the know-how of the Chinese market, where some of the most demanding customers in the world play a vital role. With more than 30 vehicles in our launch pipeline over the next 18 months, We expect those cars combined to wrap into an additional million vehicles on the road with e-car X technology. In quarter three alone, we expect to see production of a new GD model using the Antona 1000 system on check, as well as the linking code 08, which showcases our full platform with the Antona 1000 Pro Cloud Picks. driving auto operating system, and our automated driving control unit, ADDU, with LG Plus ADAS from G-Car. Peter Serino, our COO, will now discuss these important milestones and some of our operating accomplishments in quarter two.

Peter. Thank you, Ziu, and good day, everyone. Ziu detailed our strategy and customer successes, so I'll cover what we did operationally in Q2. Our focus is twofold. investing into R&D, which translates into better, more innovative products, and expanding our network of partners. Our company now operates in 14 locations across three continents, with recent facilities opened in the US and Germany. The consolidation of JICA brought a further 300 engineers into our company, based mainly in Suzhou and Hangzhou, China. Our new R&D engineering center in San Diego complements our software development center in Sweden and will be led by eCorex's CTO, Yongqi Yang. The team there will focus on advanced automotive IP development and we will plan to scale up the facility over the next 12 to 36 months. Similarly, our engineering and sales facility in Stuttgart, Germany was announced this quarter. It aims to support European OEMs with a focus on customers in Sweden, Germany, France, and the UK. These teams complement our core China-based engineering R&D team. And all in all, we have more than 1,500 engineers supporting our global R&D efforts. This commitment to R&D enables us to lead the sector in the new product introductions that push the boundaries of the in-car experience. At our Tech Day on March 24th in Wuhan, and at our Investor Day on May 9th in New York, we announced several new products that support our growth now and in the quarters ahead. These new hardware and software solutions include the Antora series, which provides a high-end automotive-grade intelligent cockpit experience with competitive cost performance. eCarX's well-integrated Antora SoC solution also helps customers reduce their engineering costs and speed up their time to market. Very soon, we will be seeing more and more cars on the road with this technology. Makalu is one of the most powerful intelligent cockpit products available today, and it offers a new in-vehicle experience with amazing 3D graphics, combining both security features as well as entertainment elements, powered by an AMD SoC and Unreal Engine graphics solutions. CloudPeak, recently debuted in the Volvo EX30, serves as a cross-domain infotainment system software. It is also worth noting that we continue to successfully sell our existing products, announcing in May that together with Noissoft Corporation, we will customize the mass production of an intelligent cockpit product for the Chang'an Mazda CX-50 model. These are based on our E02 SOC core module, which already has been deployed across almost 1 million vehicles across 26 separate models of a variety of automotive OEMs. This product offers many useful and sophisticated functions for the modern driver. As you know, eCARX is at the center of a unique differentiated partnership ecosystem designed to create disruptive innovation and technology for growth for the automotive sector. We were again active in the second quarter in expanding these partnerships, which enable us to more quickly add product features, enter new functional domains, and attract new customers. We have established a close partnership with Shinji Meizu, a leading Chinese smartphone manufacturer. And most recently, we announced FlyMe Auto, an exclusive new operating system that seamlessly integrates Meizu smartphones into vehicles. During the second quarter, we also signed an important agreement with Epic Games, a pioneer in 3D immersive tools. We will deploy their 3D graphics capabilities for our Makalu digital cockpit and will further collaborate on next-generation digital optics and infotainment applications. Finally, at the end of June, we increased our investment in our long-term partner, JICA, Intelligent Robotics, to 70%, consolidating JICA's results into eCARX. JICA is already focused on autonomous solutions for the GLE group and will continue to do so, while eCARX will integrate JICA systems into our products, helping us build an ADAS solution and a customer base outside of the Geely Group, both in China and globally. JICA further increases the breadth of eCARX's technology stack, bringing ADAS capability into our core product line. This combination increases the future content per vehicle we can provide into tech-minded vehicle OEMs. I'd like to spend a few minutes discussing the Lincoln Co. 08, which will be on the road later this year. This vehicle contains our entire full product stack as we bring the software-defined vehicle to the road. The digital cockpit is powered by the Antora 1000 Pro platform, deeply integrated with CloudPeak software and with FlyMe Auto for connectivity and cloud services. It is eCARX's first launch with a level 2 plus ADAS solution from JICA, a technology that we've now brought in in-house given our recent investment. The total solution offers the consumer a unique, customizable desktop experience with powerful, intuitive, easy-to-use functions that seamlessly connect the car to make travel more comfortable, more secure, and more supportive. And of course, with full intelligence-based learning and voice control, This is a fantastic vehicle. I would advise a test drive when you can. Finally, I want to introduce our recently appointed CFO, Phil Zhou, who has been with eCAREX since early 2021 and was the CFO of China and head of our China operations. His predecessor, Ramesh Narasimhan, will now go on to support EZU as an advisor on key financial matters. I'll now turn the presentation over to Phil to review the financial results.

Thank you, Peter, and good morning, everyone. As you will have already seen in the morning, EcoX enjoyed a very strong second quarter with revenue of 952 million RMB of 45% compared to the prior year period, driven by sales of goose revenue at 87%. and high-margin software licensing revenue at 212%. Service revenue, well up 144% from the first quarter, was down 36% year on year, offsetting some of the growth in goods and software. It was mostly as a result of timing differences in non-recurring engineering revenue, which is expected to be booked in the second half of the year. Growth margin increased to 31.3%, with increases in all major products and solutions. Between Q1 and Q2, the growth margin rate on computing platform products and hardware solutions improved from 20.7% to 21.1%. On software and licenses, from 70.5% to 93.8%. And on services, from 21.6% to 29.7%. All this was realized through, number one, a dedicated focus on products and solutions portfolio selling. Number two, persistent cost optimization. And number three, new product development and launch at a higher average selling prices. We also drove the effective operating expense control, with OPEX decreasing by 26% year on year. The optimization was primarily driven by, number one, we carve out autonomous driving inception, development, and high-definition mapping in 2022, and optimize our China HECAM. Number two, we drove lean operations and OPEX control in 2023. At the same time, we redeployed the savings and invested into global expansion into the UK, Sweden, the United States, and Germany. to make sure that we have a good footprint in international markets to work with top global OEMs. As Peter already emphasized, we continue to invest in R&D up 2% quarter-on-quarter, but remaining lower than the same period last year as we left the succession of our ADAS perception software development last year. Following our acquisition of an additional stake in Chica, some of that investment will now come back. Adjusted EBITDA was negative RMB 158 million, up RMB 30 million from the same period last year, as a result of a significant improvement in net loss due to a much higher level of share-based compensation expense last year. Turning to the balance sheet, at the end of the second quarter, the cash and cash equivalent balance was RMB 925 million, and improvement of RMB 24 million against the end of 2022, reflecting our good execution on profit improvement and the controlling expenses. However, it is an RMB 90 million outflow versus the end of the first quarter. We are growing very rapidly and we will need capital to drive that growth. While we are on the right path to narrow down our profit loss, focusing on operational excellence in the supply chain inventory, and the collection and payment management, as well as raising new funds. We aim to further improve the cash status. I'd like to remind you of the historical seasonality of the business, which mirrors the common pattern in the industry. We would anticipate 2023 keeping a similar pattern through the end of the year, given the pipeline of planned launches scheduled for the third and fourth quarter. With that, I will turn the call back to Zhiyu for some concluding remarks. Then we will start the Q&A session.

Zhiyu. As we grow, it is important to remember why we are here and what is our purpose. The rise of the software-defined vehicle is why Eric Li and I founded eCarX. As vehicles evolve into sophisticated digital devices with greater vehicle autonomy and as drivers' expectations of their in-car experience increases. The demand for high-powered, seamlessly connected automotive-focused computer platforms expands significantly. eCarX is a global mobility tech provider working with automotive OEMs to create new vehicle platforms from the ground up. We are well-positioned to capture share in a large and rapidly evolving market. Supported by our differentiated forced technology that simplifies and expedites automotive OEM product development timelines. Our strong results this quarter demonstrate the strength of our competitive position and the attractiveness of the market we are pursuing. Operator, could we please start the question and answer session now? Thank you.

Ladies and gentlemen, we now begin the question and answer session. As a reminder, if you wish to ask a question, please press star 11 on your telephone and wait for your name to be announced. Please stand by while we compile the Q&A queue.

We are now taking the first question.

And the first question from from CAC. Please go ahead. Your line is open.

Thank you. Thank you to the team for taking my questions. Congratulations on the results for second quarter. I have four questions for the management team. The first two questions is about research and development strategy. So the first question is regarding the collaboration with SciEngine. So could you provide a brief update regarding how the collaboration and what is the progression of the development of the next generation SOCs? Thank you. I will ask questions one by one. Thank you so much.

Cyanogen produced their SOC, taped out their most recent SOC at the end of last year. And we've been working very closely with them to bring that product to launch in our Antora 1000 and our Antora 1000 digital cockpit platforms. So we have both of those platforms launching on vehicles as we go through mid-2021. 2023 and in the fourth quarter. So I mentioned in my presentation around the Lincoln GO-08, this platform has our Antora 1000 Pro system on it, which includes the Scion Genesee 1000 SOC. And we're quite excited about the digital cockpit that we're able to launch on that vehicle, which has got a full breadth of our technology stack on it. the digital cockpit, we are launching the FlyMe Auto Link and FlyMe Auto software, our Cloud Peak software, as well as our autonomous driving system. So that's a great vehicle that demonstrates the full technology stack of eCarX.

Right. Thank you for the answer. So for my second question, it's regarding the intelligent driving. And we have seen from the presentation that e-Car access is gaining a control stake in G-Car. So could you provide us more insights into how e-Car is going to lay out the roadmap of the intelligent driving products? Thanks so much.

Sure. I mean, we invested in G-Car some years ago in a close cooperation with Geely to launch the autonomous driving control unit. As mentioned, that will come out on the Lincoln Co. We're quite excited about the Level 2 capabilities that that will bring to the market, including a navigation on autopilot solution that will eventually be brought to that vehicle. I would expect that we would be announcing further steps in the future to build out our ADAS solution set. We're continuing to make investments, both in the level two system that I mentioned, as well as into further advanced technologies in that space.

Right. Just a quick follow up. So we can see a lot of BEV plus transformer, like the perception technology in the market. So is there any plan for GCAR to follow that path, the BEV Plus transformer?

Yeah, there's no question. We'll continue to advance our technology in the autonomous space. We're pretty excited about the Level 2 capabilities, the Level 2 Plus capabilities that get launched with this vehicle. There are additional vehicles that this system will be launched on. eCARX is also aggressively pursuing additional programs in the market. So, I would expect that we'll continue to make announcements in the future, and I also would expect that we'll continue to build out our technology stack in the ADAS space as we go forward.

Thank you. Thank you so much. So, for the next two questions regarding the performance of ECI in the second quarter. So, we have seen that there's a relatively large increase in the revenue for the second quarter. So, could you ask? to help us do a more detailed breakdown into what projects in the project level, like what projects actually contribute to this increasing revenue. Thank you.

Yeah, thank you, Jiaqi. I'm happy to take your question. So first of all, we achieved the Q2 revenue with a strong year-over-year growth, 45%, and the treatment by our strong growth in our core computing platform and the software products. So regarding the computing platform products and hardware solution, we achieved 670 million Chinese yuan, 87% EV growth. Majority of that achievement was attributed by further penetration into Geely Auto and Geely ecosystem brands in the year like Smart, Lotus, and Zeker. And we also focused on our product and solution offering in a new EV market segment, and we captured a curve of the market growth So if you look at the general market growth in the first half of 2023, the new EV sales in China actually is 44% growth year-over-year. And in a quarter, we also drove the software and the license revenue. We achieved a record high, like 113 million Chinese yuan, 212% growth. The growth was primarily driven by the IP license sales. And at the same time, we also, you know, drove very effective cost reduction on third-party software sales. So in short, we optimized the portfolio of the product and the solution sales, increased the ASP or total revenue per unit, and the persistent cost optimization are the three major reasons or the engines for our profitable growth.

Thanks so much for answering. So the last question is regarding the the projects. We have just heard that there's going to be 30 models in the next one and a half year, right? Three zero. Could you help us do a more clarification of this?

Yes, certainly. I mean, we've got a very robust pipeline inside of our business. So we've got, as we mentioned, an engineering team of close to 1,500 engineers that are all working on various set of programs. These products, I think, as span numerous OEMs. We mentioned Chang'e Mazda. We've recently announced FAW, as well as the Lincoln Co. product we mentioned today are all in our pipeline. In addition to that, we've got international launches across brands like Smart, Lotus, Volvo, and Polestar. So we're quite excited about the breadth of products that are in our launch pipelines. and continuing to work with additional OEMs beyond that set to broaden the set of customers that we work with.

Right. Thank you, Tim, for the elaboration. I appreciate it. Thanks.

Yeah, thank you for the questions. Thanks.

Thank you for your question. We are now taking the next question. The next question from Derek Soderberg for Cantor Fitzgerald. Please go ahead. Your line is open.

Yeah. Hey, everyone. Thanks for taking my questions. I wanted to start with gross margin. Gross margins have been on the rise. Curious if you can maintain gross margins sort of above 30% or at these levels. And then, Phil, can you talk about sort of how you're approaching the pricing of the hardware and software? Is there a target gross margin that you're hoping to get? And how should we be modeling gross margin going forward?

Yes, of course. I'm happy to take your question. So we deliver, ECOS deliver a diversified product and a solution offering. And we on purpose shift our focus on how value added product and solution to our customers. And we are able to integrate the value of the industry chain and offer benefit to our customers and the partners. So, what happened recently is we focused on transforming our software and the license selling. Basically, we want to transform our business model into a license or royalty per unit business model, which actually can improve our profitability a lot. At the same time, as Peter just mentioned, we are going to launch more than 30 vehicle programs in the market. which means we have enough pipeline at our hands so we are able to continue to drive our service, R&D service growth in the longer term. And of course, we focus on our core computing product selling. So we launched a new product and we got involved in our hardware solution product. So we offer Antora, we offer Macalu, we offer those advanced technologies and keep improving the content per vehicle. So with that, we are able to drive our consistency and pricing as well as profit growth. So these are the main drivers that the company is taking.

Got it. That's helpful. And I also wanted to ask, just touch on that strong pipeline, just as my follow-up question. I'm curious what sort of the revenue mix between electric vehicles and combustion engine vehicles today. You guys mentioned sort of 30 vehicles or so in the pipeline planned for launch. I'm curious how many of those are for combustion engine vehicles, and if you expect substantial growth in that market as well beyond electric vehicles, or maybe that's not the focus. Thanks.

Yeah, Derek, thanks for the question. We certainly have both types of vehicles inside of our portfolio. But, you know, the place that I think we're quite excited about the technology and the investments that we're making is in the electrical vehicle space. So I think most of the vehicles inside our pipeline are EVs. And, you know, I think that's a great opportunity for us to kind of bring this always connected, always on, you know, always updated software to find vehicle life. Got it. Thanks, guys. Thank you.

Thank you for your question. We are now taking the next question.

Oh, cool.

And the next question from Shelley Wong from Morgan Stanley. Please go ahead. Your line is open.

Hi, this is Shelley from Morgan Stanley. Thank you for taking my question. I have two questions here. So first is about the revenue mix. If we look at the current, like the revenue breakdown, like the sales of the goods, like the digital cockpit still accounts for the majority of our revenue and the profit. So do we have any targets or priority on the future revenue mix? Like, do we want to do more hardware or software in the future?

Thank you, Sherry. This is a very good question. So talking about the product, a solution, a revenue mix. So in the second quarter, actually, we drove a significant growth in the software and the license portion. At the same time, yes, you are right, 70% of our revenue still came from the hardware and the cloud computing platform. And we keep optimizing our revenue mix through high-value-added solution selling to the customers. So with that, we are able to keep our pricing and our margin stable, and even it can improve our profitability step by step. So I would say going forward, we will keep doing that. And the ideal mix of our business should be, you know, at least 60%, 70% still from our core computing platform. That is our fundamental solution. At the same time, we will drive software and the service business, like 30% or 40%.

And Shelley, Peter, just to add to that, We mentioned on this latest Lincoln Co. 08 that we're also launching an autonomous system. So we have a number of additional launches on that same ADCU system in our pipeline. I think we'll continue to diversify our product set beyond the digital cockpit into more solutions like ADCU that require fantastic software and very solid computing platforms. right within the core of our business. So we're definitely excited about that launch and its ability to increase our content per vehicle going forward.

Got it. My second question is about the Baizu partnership. So we have recently entered the partnership with Baizu for the large language model. Can management share more color on how we will collaborate with Baizu and the What are the future revenue opportunities from this partnership?

Yeah, certainly, I'll take that. I mean, you know, the AI applications in the digital cockpit and, you know, across the number of different vehicle applications are quite exciting for eCARX. So this is an opportunity we've been collaborating with Baidu for some time and really excited to announce it. The customizations and capabilities that we think it can bring to the user experience inside the car are quite extensive. Certainly, there's very clear applications like improved voice control inside the car, and I think we'll continue to evaluate and expand how we can help customize the digital cockpit with these types of AI applications within them.

Very clear. Thanks a lot.

Thank you for your question. We are now taking the next question. And the next question from Kelly Lee from Jefferies. Please go ahead. Your line is open.

Hi. Thanks for taking my questions. I have two questions as well. The first one is with increasing application of large language model to the vehicle end. We're seeing there are like higher requirements on the computing power of SOCs. I'm wondering how we cope with this new trend on our next generation products on this front.

Yeah, certainly. I mean, that's a trend that I think eCarX has been participating in for some time. If you look across our SOC roadmap, on a regular cadence, we continue to launch more capable computing solutions into the vehicle, and I think this will definitely continue. The Antora series that we launched recently here, we're able to bring that to the vehicle both in an Antora 1000 solution and an Antora 1000 Pro, which includes two SOCs. So it's a scalable solution that also is cost-effective for the OEM to implement. So both of those systems will be in vehicles as we go through this year. And then in early 24, we've already announced the launch of our Macaloo system, both in some G-Dubends as well as the smart brands. And that's a very powerful computing power system. So I think those capabilities, we're excited what they bring to the car, and they certainly will include a number of AI applications within those solutions.

Thank you. My next question is about the service revenue. So we're seeing that the service revenue was down 36% year-over-year. So, any guidance for the second half?

Yes. So, the service revenue in the second quarter showed negative 36% year-over-year, but we also grew by 145% quarter-to-quarter. The service revenue, you know, the decline is primarily due to the timing difference. So in the second half of the year, we are able to focus on those non-recurring engineering or R&D service deal. So with that, we are able to restore our service revenue growth at a novel level.

Understood. Thank you.

Thank you for your question. We are now taking the next question. And the next question from Poi Frat from Allianz Global Partner. Please go ahead. Your line is open.

Yeah, good morning. Thank you. Thank you for taking my question. I apologize if it's redundant, but I had to log in and out of the call. So can you just talk about gross margins? Gross margin percent was just a little bit over 31%. what's the outlook for the second half of the year and then looking into 2024 from that standpoint? And then has your pathway to positive adjusted EBITDA changed at all? And, you know, you're looking for positive EBITDA in 2024. And do you think you can achieve positive EBITDA for the entire year or will the will be a first half negative margins, EBITDA margins, and the second half positive. Can you just give us sort of an idea on that?

Thank you. This is a good question. So for the margin performance, actually, the team is fully committed to drive the profitable growth. As I mentioned earlier, we have a diversified product and solution offering in the market. At the same time, we keep evolving our offerings. We integrate industrial value for our customers. So that's why we drove really good momentum on profitable growth in Q1 and Q2. And we believe that this momentum will continue. And for the full year, we have confidence to deliver our profit growth, as we mentioned earlier. At the same time, regarding the EBITDA outlook, yes, Latim is working pretty diligently in our lean operation. So we drove a very effective operating expense control year-over-year. As you can see, that is a minus 26% optimization year-over-year. And at the same time, that leaves our loan to deploy our savings to our strategic area like always expansion and advanced technology development. So we will keep doing that and our profitability target will be met for sure.

Great, and then if you could talk about the next generation, you talked about Malakou or Lou, sorry. Do you expect to have pricing leverage on that next generation product or do you think that their competitive landscape will, how will the competitive landscape impact your ability to generate some pricing leverage on your next generation products?

Yeah, great question. I mean, we certainly operate in a very competitive landscape, and we've done that quite successfully for a number of years. We believe the automotive industry in China and digital cockpit is certainly quite a competitive space. As we continue to launch new products, whether that's the Antara 1000 Pro that I mentioned earlier, the The McAloo that you discussed, as well as the ADCU, I think we're quite excited about our ability to increase our content per vehicle across those applications. So as we look across our pipeline, as these solutions continue to bring additional capabilities into the vehicle, we definitely see some level of upward momentum on our content per car.

Great. Thanks for your time.

Yeah, thank you. Thanks.

Thank you for your question. And we're now ready to take the next question. And the next question for Jaqen Ding from HSBC. Please go ahead. Your line is open.

Thank you. This is Jaqen from HSBC. I got two. The first question, I think we'll briefly discuss the part of it. looks like China is heading towards Level 3 commercialization, given the favorable policy, and also more of the OEM joining the club to launch the city autopilot functions, and potentially we're going to see that roll out in a more larger scale. So between Level 3 and Level 2, I think you briefly mentioned there is content opportunity, but could you shed a little bit more light in terms of how our content per vehicle opportunity distinguished between Level 3 and Level 2? And what's the margin profile difference over there? If we push this through more value addition software functions, how much, like, if we could quantify that a little bit? That's the first.

Yeah, sure. I'll take the first part of that question. I mean, you know, when we look at the landscape in the ADAS space, you know, we fundamentally believe that most of the applications in the short term will be level 2, level 2 plus. You know, getting a vehicle with Navigate on autopilot on the road for us is quite exciting, and I think we're going to continue to be able to broaden that landscape of capabilities that we have in our Level 2 Plus system, you know, including parking functions and so on. So I think in the near term, we believe most of the volume will be in the Level 2 space and Level 2 Plus space. But certainly we have our eye on the level three applications and are already working on a number of advanced development programs inside that space as well.

Got it. So can we understand that in terms of levels three to two, probably more software opportunity for us to explore?

Certainly, as we get to level three, there's more capabilities and more requirements from both the software and a computing horsepower perspective. So I think we will, as I said earlier, we would expect to, in the future, make additional announcements in our ADAS portfolio and roadmap and continue to broaden the capabilities of that product line.

Got it. This naturally leads us to the second question. How many soft conundrums? We always think the software business would be very scale, but under the premises that our customer would be used a standardized software. But I guess you mentioned earlier, we have like over 30 projects in our pipeline. So I guess each OEM probably would also require a little bit of ad hoc work into that. So we saw some of the peers, they've been struggling because each OEM would want them to do different things. Therefore, you need to support a huge personnel account for taking care of different projects. That makes that a little bit less scalable and a little bit more labor heavy. But in order to get your software loaded in more vehicles in the future, you probably also need that kind of re-engineering capability. So where are we in terms of these software business conundrums?

I mean, when we look at our software teams, I think our organization is very focused on platforming. So whether that's across current generation or future generation products, reuse and expanding our feature set is definitely something our engineering teams spend a lot of time investigating and ensure that we're kind of maximizing the reuse capability so that we can provide a competitive offer to the market. That being said, when we engage with customers on the digital copy solutions, there's certainly an element of customization, especially in the UI, UX area, and that's a place that we work very closely with our OEM partners on.

Got it. That's very clear. Thank you very much.

Okay. Thank you.

Thank you for your question. Just as a reminder, if you wish to ask a question, please press star 11 on your telephone.

Star 11 if you wish to ask a question.

There are no further questions at the moment.

all right well maybe we'll wrap the call up just certainly wanted to say you know thank you for everyone for joining and a great set of questions today and certainly if there are any follow-ups please feel free to reach out to Adam or Renee for any follow-up questions going forward but thank you for the call today thank you and that's conclude the conference for today thank you for participating you may hold