iQIYI, Inc.

Thank you for standing by and welcome to the ITE third quarter 2022 earnings conference call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Ms. Chang Yu, director of the company. Please go ahead.

Thank you, operator. Hello, everyone, and thank you for joining ITE's third quarter 2022 earnings conference call. The company's results were released today and are available on the company's investor relations website at ir.ite.com. For the call today, our CEO, Mr. Yu Gong, will give a brief overview of the company's business operations and highlights, followed by our CFO, Mr. Jun Wang, who will go through the financials. After the prepared remarks, the senior management team will join Mr. Gong and Jun in the Q&A session. Before we proceed, please note that the discussion today will contain forward-looking statements made under the safe harbor provision of the U.S. Private Securities Litigation Report Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, and now limited to, those outlined in our public filing with the SEC. ITE does not undertake any obligation to update any forward-looking statement, except as required under applicable law. With that, I will now turn the call over to Mr. Gong. Please go ahead.

Hello, everyone. I'm very pleased to take this opportunity to report on our program. on the third quarter and show our views on the business. Through efforts in the first three quarters this year, ITE has completed an iconic turnaround with business performance far exceeding the targets we set at the beginning of this year. There are two parts to this iconic turnaround. We have been growing the non-GAAP operating profit for four consecutive quarters starting from Q4 last year. And for the first three quarters this year, we achieved nearly RMB 1.2 billion in non-GAAP operating profit, a sharp reversal from the operating loss of RMB 2.5 billion over the same period last year. This non-GAAP operating profit in Q3 alone exceeded RMB 500 million. Meanwhile, we generated positive operating cash flow for two consecutive quarters. Second, our market leadership remains unchallenged, and our market share in September actually hits historical high on the content side. According to enlightened data, we remain number one in terms of effective video views for our inclusive dramas, more than our competitors in the second and the third place combined. As for the mobile user metrics side, we were also number one across call metrics, including user base, user engagement, and the user signature. Our subscriber base has grown from 95.6 million on June 30th to 106.2 million on September 30th, representing a net addition exceeding 10 million. How did we naturally improve financial performance without gaining market share? The key is our long-term commitment to original content. We are glad to see that the original content has become a main contributor to our content supply. Among the dramas we launched in Q3, 65% were original content, a historic high. Meanwhile, the hit ratio of our original content improved significantly. As many of you know, IT's popularity index is an influential indicator of content popularity. Of the six blockbuster dramas with popularity in jazz, of over 10,000 in our history, we launched four this year and two in Q3. Both are original titles. Hundreds of millions of users binge on our original content blockbusters, which drive us drive up user base and market share, and then translate into the huge improvement in our financial results from loss to major profitability in a single year. Behind this title is our unique approach to content production and operation, which is our core competitive edge. As such, our iconic turn around is very difficult for others to replicate since it is based on our years of expertise and extensive library of original content. With original content as the key to our success, we will continue to execute our calm growth strategy. This means seeking value growth prompts while ensuring overall operating efficiency, enhancing content investment, and marketing spending in an appropriate manner. With this strategy, we will continue to provide users with appealing content and superior services and further drive the healthy development of business. Now let's go through the detailed performance of our business segments, starting with membership services. Membership services have always been our most important business segment. We are determined to roll out strategies and allocate resources to support the continuous growth of our membership business. The average daily number of total subscribers in Q3 was 101 million, a net gain of 2.7 million compared with Q2. September was strong in particular. The number of subscribers at the end of September surpassed 106 million. grew by over 10 million compared to June 30th, and over 2.6 million compared to last September. We are happy to see that. Even after summer vacation ended, subscribers continued to grow in September for the first time in the past four years. And the average daily subscribers of this September also reached is highest level compared to all the past subscribers. Based on our latest subscriber numbers, the strong momentum continues. Such success was mainly driven by premium content, indicating that users still have strong appetite in paying for excellent storytelling. Of course, competitive edge lies around the ability of constantly supplying high-quality content, discover and produce exceptional original content. Meanwhile, we strategically emphasize on bringing more privileges to members across wider content categories, which leads to improved monetization ability of our subscriber base. One important point to note is that original content has become a major contributor to our membership revenue. In Q3, the top three revenue contributors were all original content, namely Love Between Fairy and the Devil , Chasing the Undercurrent , and the Heart of Genius . Our multi-season variety show the Rep of China 2022 also adapted earlier access for subscribers and ranked among the top five revenue contributors for the quarter. On a separate note, membership services revenue was slightly below our expectation in the third quarter. This was mainly driven by three factors. First, the temporary decline in consumer sentiment in May, June, and July due to pandemic resurgence. Second, the delay of certain key dramas. And third, the significant reduction of marketing spending as part of our business stress test. Starting from the second half of August, we successfully reversed the trend with a series of premium content releases, including Love Between Fairy and the Devil, Chasing the Undercurrent, and A Thousand Year for You, Xing Jun. Also, the reasonable increase in marketing spending and the recovery in consumer sentiment also contributed positively to strong growth in subscriber numbers. As a result, this September marked as the strongest September in our history. This means the strong performance of our membership business was not fully reflected in our Q3 results. In Q3, our monthly arm continued to grow annually, but had more deep sequential. We offered promotional discounts. during summer season to encourage more users to experience our service at a relatively low price point. We believe the value created by these subscribers will be reflected in the future. Moving on to content strategy and the performance. In the past three quarters, we achieved significant results improving both quality and efficiency. Even though we launched fewer titles than last year, we are able to generate more premium works. The performance of our dramas was outstanding in Q3, especially for original dramas. As we had big improvement in areas such as content supply, revenue contribution, success rate and word of mouth. One of the best way to understand this success of content is to understand our commitment to the original content strategy that we set long ago. So our performance during the quarter was not accident and it's replicable. Our investments in original content over the past year have been productive and bearing fruit. I'd like to show some data. Among major dramas launched in Q3, original dramas accounted for 65%, the highest in our history. Meanwhile, the success rate for original content have also increased. Two dramas broke the popularity index of 10,000 in Q3, with two more dramas breaking 9,000 score. All four were original content. This in original content was driven by the unique and effective content methodology we established, which we have soon processed with content creation and production to post-op broadcasting powered by a strong team of professionals and supported by a mature and high efficient operating mechanism. First, we focused on improving the content creation and the production qualities of our in-house studios. We also have sophisticated supporting teams with highly experienced professionals across different factions backing the studios through the entire process. Second, we have established a mature and highly efficient mechanism right through the whole process, enabling high-efficient decision-making, strict quality control and optimal content scheduling. The key to this mechanism is a profound understanding of the content industry as a whole, based on over a decade of experiences in the industry. This forms a high barrier that it has to pursue in the short term. The pursuit in original content have improved the overall quality and influence of our content, gave us absolute advantage as the industry leader. In terms of market share in September, effective views of our dramas ranked number one, with the greatest lead in our history. Effective views of our inclusive drama took an absolute lead, more than the sum of the competitors in the second and the third positions, according to Invitant. In terms of popularity, we launched the ITE Popularity Index back in 2018, and since then, only six titles received a score above 10,000, and 22 titles received a score above In other words, titles with a popularity index of over 10,000 are considered potential front track titles, and over 9,000 are household blockbusters. Among the top six popular drummers, four were released this year, and two in Q3. For the first nine months, a total of seven drummers broke 9,000. Our content has also received great word of mouth. Users actively discuss, rate, and recommend our content on social platforms. On a third-party platform, dobar.com, nine of our dramas launched in Q3 received a rating of over seven, the best quality performance in our history. The performance was driven by our carefully refined content scaling based on our content reserve and user demand. For the two drama breaking in a popular index of 10,000 in Q3, Love Between Fire and the Devil tapped into the demand of young generation audience during the summer vacation as creative storytelling set. set age apart from other titles on the same general. Chasing the undercurrent, although the storyline is oriented to our relatively mature users, but well liked by a wide range of age groups and with high view completion rate. In addition to drama, we maintained or output of premium content in other categories. For variety shows, the effective views of multi-season shows, The Drop of China 2022 was leading the online variety show market in Q3. The second season of the Super Sketch Show has tracked the largest advertising budget among the variety shows we launched this year. In addition, our original animations recorded solid growth in both the number of titles launched and revenue. During the quarter, our IP franchise format also achieved a great performance. We launched both the original drama and animation based on the same IP. The love between fairy and the devil and also great synergies. Membership revenue of this original animation stand at number two on the animation channel during the until summer vacation, just behind the Japanese animation One Piece. Entering into Q4, we will maintain the strong momentum of Q3 by launching a number of highly anticipated dramas, including New Life Bing, Qingjing Ri Chang, Wild Bloom, Feng Chui Ban Xia, featuring top leading actress Zhao Liying, and A Chained Love, featured Wang Hedi, Fu Tu Yuan. The leading actor from our blockbuster drama Love Between Fire and the Devil this summer. We continue to explore new content themes that cater to diversify the user demand, such as recently launched a drama series selection targeting female audience. Place also anticipated a good selection of variety shows, children's animation, and movie slates for release. Moving on to advertising. Similar to our peers, we found against micro-headings and increased advertising revenue by 4% sequentially. For brand advertising, the revenue recovered sequentially and the year-over-year decline narrowed compared with last quarter, reflecting the attraction of hit drama and variety shows in the peak summer location season. We saw sequential recovering in the number of brand ad clients in Q3, as well as recovering of ad demand. for international brand advertisers. For performance ads, we saw revenue increases both annually and sequentially. Heading into Q4 and the next year, we face the same challenges as our peers. As Q4 is a traditional off-season for advertising, and micro-recovery takes time to be reflected in advertising budgets. Currently, we expect continuously, sequentially recovering in advertising business for Q4. For next year, if microeconomy recovers with absence of a pandemic resurgence, we shall anticipate to see year-over-year recovery also. Technical innovation has always been part of our core values. We are committed to bring the best entertainment experience to every user. At the same time, we hope to promote the industrialization of long-form videos to drive the robust development of the Chinese video industry. This ambition is reflected in our daily work as our engineering team focuses on every product detail. A recent example of our approach to product improvement was the optimization of the bullet chat quality and distribution algorithm, which improved the user interaction and Average daily number of users that activated the bulleted chat feature increased year-over-year in Q3, and the daily average number of bulleted chat interaction increased by 50% year-over-year. We also continue to utilize in-house developed tools to improve content production efficiency The IT video production management system acts as an efficient tool to help production teams. By the end of Q3, the system has been applied to five IT original drummers. In addition to improving efficiency and production quality, the system also saves costs and effectively controls budgets. For our overseas business in Q3, we saw healthy growth in membership revenue, both annually and sequentially, reflecting the popularity of our premium content and improved operating capability. Premium content launched during the quarter had a solid result, both in terms of monetization and world of mark. Here's Chinese dramas. Domestic main app also performed very well overseas, further exceeding the IP value on a large scale. Top drama under our sweet-on-shelter brand, including the love between fairy and devil, and a thousand years for you, have sunk performance. Premium content also drove improvements in monetization. For example, Advertisers recognized the value of our shelter mode and we attract partners such as Zada and Realme as title sponsors for suite-on-shelter in Thailand. In the first three quarters of 2022, we again demonstrated the powerful execution abilities, and a strong unity of everyone within IT. For three consecutive quarters, we outperformed continuously improving fundamentals, demonstrating our value to everyone. We achieved growth in market share while significantly improving our financial performance. As content is our core competency, we are confident that we will be able to deliver blockbusters on a continuing basis as we have worked out replicable methodologies for both original content production and operation. These methodologies lay a solid foundation for healthy growth. We believe that we have achieved an iconic turnaround in the context of an extremely challenging microenvironment this year. And we will continue to deliver values both to users who love our content and the stakeholders who are as confident as we are in the prospect of long-form video. I will hand over to Wang Jun for financial details.

Thanks, Ms. Gong, and hello, everyone. In Q3, we booked RMB 7.5 billion in total revenues, up 12% sequentially. Our non-GAAP operating profit reached RMB 524 million, increased 53% sequentially. Meanwhile, we have been generating positive operating cash flow for two consecutive quarters and recorded nearly $200 million operating cash flow in the third quarter. These encouraging results demonstrated the resilience of our business under extremely challenging macro environment and the pandemic surges. Within the revenue line, we recorded membership service revenue of RMB $4.2 billion. As Mr. Gong mentioned in his opening remarks, the performance of our membership of businesses was back-loaded, and the current Q3 results is not a full reflection of the strong momentum we observed. During the quarter, the number of subscribing members grew from 95.6 million as of June 30, 2022, to 106.2 million as of September 30, 2022, representing a net addition of over $10 million during the quarter. Now move to the cost and expenses. The third quarter cost of revenues was RMB $5.7 billion, representing a cost saving of RMB $1.3 billion compared with the same period last year, or down 19% annually. The accounting costs The significant component of cost of revenues decreased 18 percent annually and up 12 percent sequentially. This sequential increase is the result of operational initiatives under our calm growth strategy. We launched more hits during the quarter, bringing more subscribers and generating more profits, which forms a virtuous cycle. And our gross profit margin, which is a direct matrix to reflect the ROI of our accounting businesses, consistently expanded in the past four quarters and reached a historical high of 24% in the third quarter, compared with 7% in the same period last year. Meanwhile, with the continuous optimization of our business operations, Our total operating expenses decreased by $470 million year-over-year. The expanded gross margin and disciplined operating expenses combined contributed to our non-GAAP profit expansion. For Q3, the non-GAAP operating profit was RMB 524 million compared with the non-GAAP operating loss of RMB 1.1 billion for the same period last year. And it's up 53% quarter-over-quarter. At the end of the third quarter, the company had cash, cash equivalents, restricted cash, and short-term investments of RMB 5.0 billion compared with RMB 4.9 billion in the previous quarter. Our operating cash flow reached $196 million during the quarter. Going forward, we will continue to execute the calm growth strategy, and our commitment to achieve healthy business growth remains unchanged. We are confident in our ability to generate value for our stakeholders in the long run. For detailed financial data, please refer to our press release on our website. Now I will open the floor for Q&A.

Thank you. If you wish to ask a question, please press star then 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then 2. If you are on a speakerphone, please pick up your handset before pressing the keys. Participants are asked to please limit their questions to one per person and to rejoin the queue to ask further questions. Please also ask your question first in Chinese and then English. And the first question will come from Thomas Chong of Jefferies. Please go ahead.

Thank you management for taking my questions. My question is about the membership business. Can management talks about the Q3 overall membership business performance as well as the growth driver. Is it coming more from the number of subs or from the arm side? And also, what are the key drivers going forward? Thank you.

Thank you. I'm Gong Yu. I'll answer this question. This question is about two aspects. First, let's talk about Q3's performance. The Q3 member's income, mainly for three reasons, has dropped slightly. The first reason is that in May, June, and July, due to the impact of the epidemic in the first half of China, the number of consumers has dropped. In June and July, some of the content in our plan was delayed. At the same time, we have some excessive to reduce the market cost. This led to poor results in the first half of the third quarter. However, in August, the consumer's will came back to life. We increased the investment in the content and the market. The online content was also online as scheduled, which led to the growth of members. Translate for Mr. Gong. The flight deal client in membership revenue was due to three factors mainly.

First, the temporary decline in consumer sentiment in May, June, and July due to the pandemic resurgence in the first half of the year. Second, the delay of certain key dramas during June and July. And third, the significant reduction of marketing spending as part of our business stress test. And starting from the second half of August, we successfully reversed the trend with a series of premium content releases, including Love Between Fairy and Devil, Chasing the Undercurrent, and Thousand Years for You. And also, the reasonable increase in marketing spending and recovery in consumer sentiment also contributed positively to strong and continuous growth in subscriber numbers. As such, Our membership services revenue grew from a relatively lower base of the sub-number in July. The strong subscriber number growth started to pick up in August. As a result, the performance of our membership business was back-loaded, and the current Q3 result is not a full reflection of the strong momentum we observed. 三季度三月当中有两个月是暑期。

Thank you

In Q3, there are two months for the summer vacation, and among our user base, there are a large number of students in this group, saying that they are the potential users for us. So therefore, we offered promotional discounts during the summer season to encourage more users to experience our services at a relatively lower price point. That's why it caused some of the fluctuation in ARM during the third quarter.

The vision of future member businesses is to promote the growth of member income at the same time as the number of members. The main driving force of the growth of the number of members comes from two aspects. One aspect is the investment of content, and the other aspect is the investment of the market. The investment of content mainly refers to investment of investment content.

for our entire membership business going forward our main goal is to grow the membership services revenue while achieving healthy performance on the subscriber numbers and arm and in terms of growing the sub numbers in the future it comes from two aspects one is the continuous investment in content mainly especially for the head premium content and also the second point is

For the arm growth, it comes from two reasons. One is the lowering of the discount.

in the past years, and also that increasing the listing price of our member business.

Thank you.

Thank you.

The next question comes from Alicia Yap of Citigroup. Please go ahead.

Hi, thank you. um so good morning thanks for taking my i mean good evening thanks for taking my questions and congrats on the strong results. My question is related to the video content. So ITE has successfully released a number of heat dramas this quarter, this year, that received very good feedback. So can management share with us how will ITE ensure in the future that you will also have a very high heat ratio for your drama? Thank you.

This question is about the content business. Let's have our chief content officer, Wang Xiaohui, answer it.

This question is content-related, so I will invite our chief content officer, Wang Xiaohui, to answer this question.

Thank you. Hello, everyone. I'm Wang Xiaohui. I'll answer this question. iQiyi has been implementing this hot-dose indicator since 2018. After implementing this indicator, we had a total of six steps. We launched the ITE popularity index back in 2018, and since then, only six titles received a score above 10,000. Four were released

this year, and two in Q3. And this perfectly demonstrates that through our long-term commitment to our original content, the original content has become one of the main contributors to our Webmaster content.

In summary, the experience of the past has roughly three aspects that have led to this result. The first is that we have built a team of self-employed people with a variety of styles and professional talents. At the same time, our company has provided a strong backup under a scientific basis from the whole process from the creation to the broadcast. This includes content creation, production, broadcast, publicity, and so on.

The success was mainly contributed from three factors. First, was mainly attributable to the powerful production team that we have built throughout in-house studios, which contains highly experienced professionals with various creative styles. We also have very sophisticated supporting teams across different functions to support these studios through the entire process. which runs through processes from creative ideas, development, content production, broadcasting, and marketing.

For example, from a basic point of view, we rely on a professional team and a relatively relaxed creative space to work with the fine-tuning of the script to provide a long-term, continuous follow-up to ensure that good content has a good basis for creation.

At the script level, we rely on the professional teams and give them relative flexibility in screening the creative ideas, emphasize on polishing scripts, which build a solid foundation for the content creation process.

For example, at the production level, after we have a good basis for creation as a guarantee, we cooperate with a rigorous opening strategy, and cooperate with professional, innovative, and reliable partners.

At the production level, once we have the solid content creation foundation in place, we will follow by rigorous process before projects entering into the filming process. In addition, we will collaborate with highly professional, creative, and reliable partners in the production process. select the most suitable actors based on our comprehensive casting mechanism. Out of the above, we'll safeguard the continuous creativeness and the high quality of our original production.

The second reason is that we have already formed a set of more mature and efficient operating mechanisms. This mechanism runs through the entire process from creative production to production, and achieves an efficient decision. The second factor was contributed by we have established a mature and highly efficient mechanism running through the entire process.

from developing an idea into original drama series to broadcasting and marketing it. This mechanism enables highly efficient decision making, strict quality controls, and optimal content scheduling based on user preferences. And going forward, we will continue to seek an effective balance between embracing the diversity of content creativeness and efficiency in the production process.

The third aspect is that our intelligence production system is getting more sophisticated, which also helps in terms of increasing the possibility of creating blockbuster content.

The next question comes from Lee Zong of Bank of America Security. Please go ahead.

管理層晚上好,謝謝接受我的提問。 我的問題主要是關於財務方面的。 我們這個季度的運營現金流跟這個Free Cash Flow 同比跟環比都有比較明顯的改善。 而且Free Cash Flow也是首次轉正了。 所以想請管理層可以分享一下主要的驅動因素有哪些。 Thank you for taking my question. My question is mainly regarding cash flow. Notice that we have meaningful improvement in free cash flow and operating cash flow with a positive free cash flow this quarter. So can you give us more color on the driver behind this and how should we look at the trend going forward? Thank you.

Okay, thank you. I'm Wang Jun. I'll answer this question. I'll translate it myself later. From our point of view, the second question is easier to answer. We are very sure that this trend can continue, and we are confident that we can achieve this result. Why is that? If we look back and do this turnaround, the whole process, we will find that our starting point, our starting point at the beginning is actually the cost control, is the cost reduction, is to pay attention to the content ROI, is to pay attention to our quality output. This is our starting point. In the past three seasons, we have actually been continuing to do this thing. But in the third season, we did see Some very new give us to see some very new one this performance these new performance is actually brought better trend should say better trend of possibility. More specifically, what we see here is just like what we just talked about. The content is more invested. The quality of the content is higher. The return rate is higher. The better content will bring two things. The first thing is that we Because of the increase in our number of users, because of the increase in our income, it will bring an increase in profit, and the increase in profit will bring an increase in cash flow. So this is a positive cycle. So in the third quarter, when we see such a positive cycle, from our heart, we feel more encouraging and more confident. Probably I was just trying to translate for myself. So I think that to answer the second part of the question, first, yes, we are very confident that this trend could continue in the future. And behind that, we do see if we can review the entire process of the turnaround, we will say that the starting point of the turnaround is a very disciplined expense management It's a very ROI-focused content strategy, and we have been continuing to do that throughout the three quarters. But on top of that, in the third quarter, we do see some new catalysts coming in, and these new catalysts including a virtual cycle, which starts with our investment in the content. Then our investment content generates more hits, more hit titles, and gives users more value proposition. which in turn attracted more members than creating possibility for generating derivative revenues. Then on top of that, it will convert into the profit, then in turn bring us more free cash flow. And we will certainly continue to do that, and we do believe this success is reputable, which support the trend, which support the positive free cash flow trend. So this is point number one. And then on top of that, we would like to emphasize one more thing, because both Mr. Gong and Mr. Hui have already mentioned the advantages of self-knowledge, original content. Then we always believe that our business is a core. Its core efficiency lies in the content, which is the content of self-knowledge, and the content of self-knowledge itself. We have the full power. It itself can indeed bring us more. If it's not this single quarter, it should be from the future perspective. It has more potential to extend income, and this extension of income itself is a high profit rate. This pattern and So on top of that, we also like to comment that because we have been very much focused on original content, as you guys have been, you know, asking questions around that. Now original content means IP value, and IP value can generate with higher margin, and this is consistent with our experience and observation of the media conglomerates globally. So this creates the whole new opportunities for the company in the future.

Thank you.

The next question comes from Daniel Chen of JPMorgan. Please go ahead.

Uh, congratulations on the really solid result. My question is on the content regulation of our environment for the long-form video. Could many of you share some color on this? Thank you.

At the end of last year, about a year ago, the government department in charge of long-term videos, mainly the Directorate General of Management, as well as the Ministry of Information and Communications, etc., introduced a lot of policies. The review of the content has obviously become stricter. However, from the beginning of this year until now, about 2021 is last year in the whole entire 2021 there are different authorities that roll out different policies that kind of tighten the whole regulatory environment

for the online video space. But as we entered into 2022, until now, the regulatory environment seems to be relatively stable, and we haven't seen major changes in such a process.

For iQIYI, the content strategy is to reduce quantity and increase quality. For the long-term video industry, The same is true for content strategy. The same is true for increasing quality and reducing quantity. It is a coincidence that the government's management department has the same strategy to reduce the quantity of content production and increase quality.

The main current focus for us is to increase quality and optimize content quantity, which not only applies to us and our peers, and we are glad to see that coincidentally, it also applies to the various government authorities. And then they will vote out policies that are actually positive. process.

For iQiyi, after more than three seasons of practice, we have found the best amount of content and the right market for the content. Now we have found the most suitable point. So in the future, we may be able to

After the three quarters of time for ITE, we now figure out a perfect balance between the quantity that we show for content and also the amount of marketing spending in this market to promote our content. So going forward, you know, based on the success of our past three quarters and under the calm growth strategy, we believe that we can have healthy and sustainable growth for our business going forward. Thank you.

Thank you.

There are no further questions at this time. I'll now hand back to management for closing remarks.

Thank you, everyone, for joining our call today. Please do not hesitate to contact the IR team or the management if you have further questions, and see you next time. Thank you. Bye-bye.

Thank you.

That does conclude our conference for today. Thank you for participating, and you may now disconnect.