Focusrite Plc

Do we have a full crowd? It looks as though we've got 20 people on. Fantastic. James is on. I can see Phil. I can see John. All right, good. All right.

Thank you all very much for joining. Tim, Jeremy, another great set of results this morning. I think we've got a full complement. Just a quick note for everybody. who's on the on the call, and the guys are going to run through the presentation. And then if we've got any questions, you'll see there's the there's an ability on the chat function to drop a message, what would be great is if people could put their questions in there. And then Tim and Jeremy will answer them. When they come to the end of the presentation. We've also got a little demo for you as part of today's presentation as well. So with no further ado, I shall shut up and I'll pass over to Tim and Jeremy.

Thank you, John. All right. Morning, everyone. Thank you so much for joining us today. Yeah, we're very pleased with our results. I know many of you follow us and we've chatted many times before. So what we're going to do today is just start off with our introduction slide here and then go through a couple and then we're going to take you through a small video that shows some of our products in action. And we had to cherry pick what we could show. Obviously, it's very difficult to show how a large Martin audio system in a big rock and roll tour festival or installation works. So we wanted to show you some of the things that we've been doing specifically in the Focusrite Novation Camp to give you an idea. We've been talking or you've been hearing me talk for a long time about how we're really expanding our work there to be more involved in the whole value chain and own more of that entire customer journey. So you'll see some of that in what we've put together today and to give you also a little bit of exposure into the things that we've been doing on the onboarding journey and the ease of use, which are big ones for us. But before we get into that, again, just a really quick overview for those of you who are still maybe a little new to the company here. So basically the group is now six brands here between Focusrite, Focusrite Pro, Novation, Amplify, Atom Audio, and then our newest addition to the family was Martin Audio this past December. About 400 employees now on here. Really quickly, just to go over the financial highlights, you've probably seen these this morning, but again, a really good year. We're very proud of the year that we've had with all the puts and takes, and we'll talk about COVID and its impact and then organic growth and how we've been executing on our strategy with that and trying to also just keep that to the side and stay diligent on what we told you we would do. but overall you can see really good result here revenue up again a chunk of that was from M&A but our core business grew materially as well Jeremy will break that down for you Evita was up on there one of the things we're really proud of is you know that when we acquired Martin this year is we did take on some debt so we ended this year with a net cash position which we're really really proud of we're able to actually pay back the Martin audio loans that we did in a record time. So we're very pleased about that. Again, we've declared a dividend, kind of moving in the right direction, as you've seen before on here. And again, one of the highlights for this past year, obviously, was our second acquisition, which was Martin, which you could kind of see the metrics on there. So again, the graphs, as you see there, moving in the right direction, going up and to the right, that's what we like to see. really exaggerated a bit here, and we'll talk about how we accomplished that. So for the moment, though, what we'd like to do is we'd like to actually divert and play you guys a little video to show you some of the progress we've made on our products, the out-of-box experience, and just the whole workflow that we're enabling for our customers, specifically around those that are creating What you would typically say is this typical songwriter, singer-songwriter, somebody who is a vocalist or guitar player, but also another peek into that and how we've really furthered the whole production and the workflows for those who are interested in electronic music as well. So let's roll the video, then we'll see you in a few minutes.

Focusrite is the world's premier recording audio interface company. Our Scarlett range of interfaces and studio bundles are the ultimate tools for both those new to the world of home recording as well as experienced home and professional users. Scarlett 2i2 Studio Bundle includes our 2i2 interface and a studio-grade microphone and headphones, everything you need to start recording music. Getting started with Scarlett is extremely straightforward thanks to our easy start onboarding process, designed to help the user register their product and get set up with our comprehensive software bundle in no time. Our onboarding tool features multiple pathways to guide the user to their specific use case, whether for songwriting, music production or podcasting. We're going to use Novation LaunchKey with Pro Tools to build the foundations of our track and then record our instruments. Let's get started right away with a drum track. Let's lay down a bass track to complement our drums. Let's connect our microphone or any musical instrument to Scarlett and set the perfect record level thanks to our illuminated gain halos. When it's green, we're good to go. And now, let's record some guitar. Next up, let's start recording our vocal tracks with our first lead vocal take. Now let's add some thickness and excitement to the vocal by doubling it. And now by using some of the straightforward AI powered plugins from The Collective, including the Fast Compressor and Fast Equalizer, we can easily add a professional sheen to our recording. And now you can hear how easily a Focusrite hardware and software package can turn your ideas into great sounding productions. Let's take a look at how Novation and Amplify enable a creative, fast and fun music making experience for everyone, from first time users to experienced professionals. Getting started with Launchpad is as simple as connecting the unit to your computer and proceeding through our registration and onboarding procedure, then accessing your software. The first stop for many new users is Launchpad Intro, the quickest way to experience Launchpad's power right in your web browser. Loads of contents available to have you performing and arranging music in just minutes. Amplify Studio, our desktop music production platform, features a huge collection of exclusive sounds you can build and edit into original compositions. Studio and Launchpad play perfectly together. Let's get straight to it. Select a pack, grab some loops and drop them onto some tracks. A huge selection of genres are available from metal, funk and dance with new content added every week. Amplify Studio works perfectly standalone without Launchpad as well, so it's a great entry into the world of music production for everybody. Amplify Studio automatically tempo and key matches everything for us. Let's customise the guitar loop by using some of the simple, powerful editing features available. Adding and removing parts is simple and user-friendly. So now let's develop our arrangement by copying this section into a new section, adding a couple more loops and subtracting some others. We can work in a loop, or play through our arrangement as we choose.

And now we can build our arrangement with Launchpad.

To take our production further, we can easily export our Amplify Studio project as an Ableton Live session, which when opening up in Live will preserve all of our track names, track colors and track layouts, making it easy to step up to the next level. So let's use our Launchkey MK3 MIDI controller keyboard and Novation Peak desktop synthesizer to develop our song.

All right, thank you.

So thank you for watching that. Hopefully that gives you a little insight into the things that we've been up to. We've been talking about a lot of our software development. We've been talking about ease of use, the things we've been doing to really drive that customer journey and out-of-box experience. You know, the one thing that, obviously, Essen is a very accomplished musician, but the things he did are things that you could be completely completed or done by somebody who's really just starting out in a short amount of time. And that's the objective that we're really trying to do there, is whether you're absolutely a new beginner at this or you're a professional, to make sure the technology and the things that we offer really are catered for the type of thing that you're trying to do and really get your creative juices flowing. So let's continue on with our presentation here. I'm going to go through a couple slides really quickly here. Just to remind everybody, we've talked about this before. When we talk about our customers, they haven't really materially changed. We break down into basically four groups, everything from the new creator. This is somebody who may be using something like Amplify Studio, or maybe they're buying a Scarlett or a Launchpad for the first time. Really, they're just starting their music-making journey. We have passionate makers, people that, you know, that this is maybe not their first endeavor with doing something like this, and they really want to get better at making music. And we go all the way through what we call the serious aspiring producer, somebody who is, you know, a pretty serious hobby, or they aspire to make this a professional adventure for them. and then all the way to the master and facility. And these are companies or individuals that wake up every morning and they make their living off of producing audio, whether being a musician or they're doing post-production for TV or a broadcaster or whatever. And you can see on the bottom there, and I'll switch back and forth to these, One of the things as part of our strategic focus when we talk about our core products and also our M&A strategy is to make sure that the things that we offer fit into these realms so they're completing the value chain there. And you can see there's a lot of overlap with these products. So again, the idea of us actually participating in more of the value chain through here. Now, you see Martin on the bottom here because they do appeal to really getting into the serious aspiring producer and master in facility. But really, since it's such a different part of the market, we thought it really deserved its own slide for people to really understand where their focus is. Martin, if you break their business down into the most simple kind of two pieces, it's basically tour sound, which is the thing you see in the bottom right-hand corner. That's the thing that's probably the most exciting to talk about. It's the big festivals and big shows. But the majority of Martin's business business is actually in the three other areas. So the installed sound like the house of worship, the hospitality piece, and the auditoriums type of thing and nightclubs. This is where a lot of their technology and stuff really benefits the market and where they're really doing a lot. And that's been really critical for us, especially in the world of COVID, because as you know, things like live events have just come to a complete shutdown. But because Martin still has so many irons in the fire with these other parts, their business has carried on. Now it has been damaged, you know, short term, by COVID, there's no doubt about it, with the tour sound business being, you know, sort of just postponed until next year. But as different countries have come out of lockdown and phased back into, you know, a sense of normal, we've seen that there are parts of their business that are around the, you know, the hospitality and the theatrical and the nightclubs have come back. And so they're on a slow but steady, you know, trajectory to get back to a sense of norm for us. Going into the different sectors really quickly here. So we'll talk about Focusrite for a minute. Focusrite had a really, really terrific year. Again, this is where we've seen a lot of the customers that were very much inclined to start either doing podcasting or creating music at home. Musicians that some of them already own some of our kit, but now that they couldn't play out live anymore, they took to actually refining and building up their home studio. And then a lot of people in between there, people that are doing online streaming and this type of stuff as well. So again, really tremendous growth for Focusrite on here. And I have to say, we're really proud of how we rose to the challenge on this, because as you know, these products are made overseas. And so typically when you start to see tremendous growth in demand, it takes about six months to react to that. And the fact that we had actually doubled down and opened up another manufacturing plant in Malaysia really helped the cause on that. And also, when we started to see this happen, we did all what we thought were the right moves in terms of really stepping up our component buys and really working both of these facilities to the maximum capacity. And that's what enabled us to really fulfill a lot of the demand that we've seen in these products on here. Pro, like Martin, definitely a mixed story. A good start to the year, but overall a decline. Again, most of this business just came to a screeching halt around the February timeframe. The good news here is that since the year end, we're back to growth with our Pro business. We've had some new products introduced that are now shipping, and we're really starting to see recovery, especially in the post-production and installed sound market. Pro is off to a really good start this year, and we're very optimistic about their future. Novation, again, had a good year, up 9.4% on the prior year. New generations of products like the Launchpad and the Launchkey certainly helped that. And again, on the very top level, we had our flagship Synth that has done quite well. And then, of course, Amplify, our software division. You saw Studio on the video there. That's been released. We've started off, it's very embryonic right now, but we've started off a subscription service for that that is doing well and growing slowly. And we have a lot of plans for that. And again, the downloads on this are up to, you know, we've had a really good, great year on that as well. And that has been one of our key drivers in terms of really getting the brand recognized out there, people downloading this app. So Novation, again, and Amplify, again, very much the type of things, along with Focusrite, that people, especially in lockdown, and as we've seen our base grow, that people are snaggily gravitate to. Atom Audio had a tremendous year, did quite well. Those of you who remember, we acquired them July of last year, but they've done quite well. They have a lot of products that complement home recording quite well, so their T-Series speakers and their A-Series have done really well with us. We've done a lot with them in terms of aligning distribution and go-to-market strategy on there, but we're very, very proud of their result for the year. And then again, last Martin on here. Again, purchased in 2019 in late December. They had a really terrific first two months and we're just knocking it out of the park and then this hit. So their second half was down considerably. They did all the right things, worked with them very, very closely to make sure that we had really tight control on the cost. And again, as we've said, we're starting to see signs of recovery on them, especially in the installed sound part of the business. Their pipeline is growing, so we're very optimistic about them continuing into the future. So really quickly for a handover to Jeremy, here's the big highlights on here. A really great year of growth on both the revenue and the EBITDA level. Really nice on the adjusted diluted earnings per share. Free cash flow, quite well. I'm very surprised and a nice surprise on that in terms of how we ended up on net cash for there. And again, we've had another good year of a final dividend up 10.5% on the prior year, which is in line with all the things that we've been talking about in terms of our aspirations on that. So very proud of the results. And I'm going to hand it over to Jeremy to take you through some of the financial slides now. Thanks.

OK, so COVID is an enormous thing that actually happened during the year. No surprise there. On the revenue side, A substantial boost in Focusrite and Atom and a significant reduction in Martin and Focusrite Pro, net-net up. But the third bullet is really important. Post-lockdown, broader base. And so when you look in the statement and you look at Phil Duderidge, the chairman, you look at his comments, he talks about some of the other use cases that those products have been put to. That's important. And what is also relevant here is that the number of registrations that are happening on an ongoing basis have settled or are settling to a higher base than they were pre-COVID. Really important. Routes to market. Tim talks about the balance of online versus bricks and mortar changing almost overnight. So the shops shut. People still wanted the products. So what did they do? They went online and we sold into both. So that diversity helped us enormously. The manufacturing. So three years ago, I guess we were only in China and we opened a manufacturing facility in Malaysia. The diversity, again I mentioned that word, was really important when China was shut, Malaysia was open and vice versa. So that was really critical to us. And also having two on board meant that when we needed to ramp up supply, ramp up manufacture to cope with this dramatically increased demand, two manufacturers were much better able to do that than one. So the diversity has been important. And then on the people, very little disruption. Huge changes in the way that people have worked. And I'm sure that almost everybody on this call, 23 now, are probably doing so from home. So huge change, but it worked well. Regionally, well, they're all up. They're all up substantially. We've shown the organic growth as well as the total. So where it says FAEL up 16%, that's Focusrite Audio Engineering Limited. And so double digit organic growth plus minus 50% total growth in all of the regions. The US, having made two acquisitions in 2019, we've now got a much more filled out sales and marketing resource in the US, so that's gonna help us, we feel. EMEA, online retailers with a continental reach. They did really well, so we sold a lot of product to people like Thoman in Germany, so that was very interesting. And then Rest of World, As we've said before, area of investment for us, but 59.4% growth, pretty handy. So the income statement. So the revenue up just over 53%. FAEL organic growth 21. So good revenue growth. Gross margin. 42% to 46%. At the time of IPO, we were in the 38s. It doesn't happen by accident. It's a lot of hard work. It's a lot of every little helps type of thing. So it's a lot of small actions to try and improve the gross margin and get better value for the product that we're selling. I've written a few on the slide up there. Business mix, route to market, lower duty, lower royalties. There are plenty of others as well. Net result, EBITDA has risen more quickly than revenue. Nice trick if you can do it. So that's a good point there. Martin Goodwill impairment. So this is an interesting one. So fundamentally, you have to test the goodwill for impairment every year, whether there's an indicator or not. So the auditors force us to jump through all of those hoops. And without question, the revenue of Martin in the first eight months post acquisition was not as high as we planned. Now, once you get over that kind of concept in your mind that an impairment of goodwill might be necessary, deal with it. Deal with it once, having a sensible set of assumptions, make the impairment, move on. Martin is now growing from its base. It's been profitable in the eight month period. It's being managed extremely well by a very good management team. And I mentioned the word again, the diversity which provides the resilience, the improved resilience of the group is critical. Martin brings that. Tax, underlying tax rate 13%, gonna go up next year. Hopefully I've mentioned this enough times in the last 18 months. The tax rate's gonna go up next year because of a different regime for R&D tax credits. We move from SME regime to RDEC. Look it up or ask me questions if you wanna know more. The balance sheet. The biggie here, working capital, 9% of revenue, really low, normally it's about 20%, it'll go up next year, build that into your cash flows. The key thing here from my point of view, and we'll come onto it on the cash flow, if you're entering a really uncertain situation, watch the cash really carefully. and you know when you've got situations where some of the customers may be having a slightly tough time when the music stops just make damn sure that they've paid you rather than paying someone else in front of you watch the cash we focused on that we focused on it really early we were on it in february and there was a lot of attention went on it and the net result is Well, the cash flow. So what shall I focus on? Free cash flow, 21% of revenue. So our long term average is 10 to 12. Some of that is through tight control of the debtors. Some of it is because the stock went down and simply we couldn't build it up quickly enough. We hope that the debtors will be maintained. Stock will do some rebuilding next year. net result, we paid Martin off in eight months. We figured it would be between two and three years. Eight months is good. And the HSBC and NatWest revolving credit facility, Nick, I saw you on the list of people coming along to join us. Welcome. We have close relationships with our banks. We have been working with them and corresponding with them regularly and often throughout the last nine months. So Nick, thank you. Tim, let me hand back over to you. Sure.

Thanks, Jeremy. Do we have the chat window open? Just want to make sure in case. Okay, great. You guys are being very polite on the questions. I'm sure we'll get barged at the end here. So, taking you through the financials, a little bit of an overview. Great, Peter's jumped in on there. Just really quickly before we jump into the chat on here, just to remind everybody, I mean, the interesting thing, when I came on board in January of 17, in a short amount of time, we sat down with the leadership team We focused right at that time and really devised what our growth strategy was. And it's interesting that we've definitely tweaked it over time, but fundamentally the core pillars of this haven't changed. We still believe there's lots of growth in our core customer base. So we continue to focus a lot of our R&D efforts you know, in marketing and on that. And that has definitely proved out well this past year, as Jeremy is saying, we've seen our base grow through something like COVID. And also, you know, just to remind folks, you know, that even before COVID happened, we were already starting to see a relative surge in people doing home recording. And Rolling Stone recalled it, I think referred to it as a renaissance of home recording, if you will. And then natural things like new mediums like podcasting have really grown into their own. The next one is expanding to new markets. And when we talk about that, we really talk about twofold. That's the routes to market. We talked about Latin America a lot in the past, the investment that we went there. We went from, and when I joined, a guy that was a part-time contractor that got on a plane and went there every once in a while. We have four people in Latin America working for us now. and ahead of sales there, and it's grown tremendously. We've put a lot of effort into our e-comm efforts there, and that's all paid off really well. There's other areas that we definitely wanna do that. So there's definitely a routes to market and geographic component to it. Obviously, acquisition's a big one. Adam was a great first acquisition for us. All of our assumptions about what it would add to the business, how creative it would be, they've come through, and more. We're more than happy with that. And the truth is we are about Martin as well. So again, the first couple months, very indicative of the growth trajectory they were on. The team has done a great job of managing through this and we're seeing signs of recovery. We have no doubts that Martin will come out of this and be a big contributor to the business going forward. And we're not done with our acquisition story. We're not in any process right now, but we do see a lot of opportunity for us to continue to grow the group and have more eggs in different baskets, if you will. And then lastly was just the increased lifetime value for our customers. And really, this is all about instead of getting out of that thing where we're selling a point product, a hardware component to somebody, so we're actually selling them an entire ecosystem that they can work in. And you saw that in the videos, how Essen was able to actually use something like Amplify Studio to do all of his tracks in there. Sure, we want to play well with everybody else, so if you want to end up in Pro Tools or Ableton, we want that. But we want to actually have our own domain as well and have something that people can do. And the plugins that you saw and stuff, that's all part of our thing there, too. So again, we continue to execute on this. It's served us well. We've stayed heads down on this through all the distractions and things that were happening this year, and it's worked well for us. So really quickly, just again, you've seen this on here. We're really pleased with the year. You see the metrics on here. Jeremy talked about this. Since year end, consumer demand is still high, way ahead of last year. Again, we think part of that is that we have just seen an organic growth of our base. the number of people that are using this technology on there. And I think part of that, along with the strength of our brand and the fact that we're really focusing on this out-of-box experience and bringing more of the entire workflow to people, those are all sort of the magic pieces that are bringing it all together. Um, so I'm going to look at the chats on here. So I think our first question is from Peter. Given the demand was very strong as we went to lockdown, I would seem that it should fall as we came out some higher than pre cover those. Do you have any indication what's driving us? Yeah. Um, so, um, we do. Um, so yeah to be clear when this first happened um and when we started to see this happen in february our working hypothesis was this was going to be a blip we would see a big spike in demand because a lot of people would go into lockdown and then very quickly one or two things would happen the business would go back to some sense of normality or It could go down because there was a possibility that we were just pulling in sales. Well, neither of those actually have run true. What we've seen is that we've seen the demand continue to increase. And as you know from the onboarding journey we do, we collect a lot of information from people. So what is happening there? Well, the first thing is it is broad geographically. There's no one area where this is coming from. The demographic on this is very interesting and it's a very mixed bag. It's a lot of professionals that probably made their living doing things either in facilities or in the live sound market that have sort of retreated to actually doing production in their house and doing things on different social medias. A lot of them were getting more kit from us to do that. And on the beginner side, a lot of people, the latent desire to create music, looking for something to do. I also talked about podcasting, another sort of medium that's become its own art form in its own right, if you will. Those have all attributed to this as well. We also saw a number of people who had bought our products a couple years ago and maybe just got busy raising kids, whatever it was, and put it in a closet. And then they came back because now they had more time on there. And the other interesting thing on there is that one of the things that we track when we collect user information is how much of is through referral. So we asked the question, where did you hear about this product? Or what brought you to the Focusrite brand? Now, pre-COVID, typically about 20% of people would say it was a recommendation from friend. Over the past four or five months and kind of continuing through now, that number's up into the mid 40s. So obviously what's happening is that a lot of people are getting into this, having a great experience, telling their friends, and that's driving a lot of it as well. Our working hypothesis now is that at some point, yes, we will see the business get back to a different sense of normal. We believe that will be higher than pre-COVID on there because the base has grown and that we've done, you know, with everything that we've done, we've got a lot more people that are accessing and wanting to use this type of technology. Let's see, you have put more promise in other non-music cases today. Is there enough to create? Yes, so James, thank you. That's a great question regarding things like podcasting. So yes, our products right now, they serve those purposes well. They're not a perfect fit, but they do a really good job to the point that people are buying them and that's growing. However, when we look at our roadmap and look at one of the areas when we talk about that growth in our core business, That is certainly an area that we believe that we could have some products that are specifically designed for that audience. So I'd say watch the space on that. Cool, any other questions? Peter, we know that shifted your routes to market. Where do we stand?

You want to take that one? Yeah, sure. Well, I mean, so the question is, we know that you shifted your routes to market to online during lockdown. Where do we stand today? Well, what that's referring to, I mean, certainly as soon as lockdown started, all the shops shut and everyone bought to online. And it was either our own online store or other people's online stores. when the shops opened again to a large extent it reverted so people the ability to see hear, feel, whatever the product is useful for people and so there is a place and there remains a place for bricks and mortar but also e-commerce has been strong for us e-commerce in FY19 was about 1% of revenue and in FY20 it's about 3% of revenue so it's something which is growing more particularly in areas less well served by its own distribution network. Shared to e-commerce heading towards back to shared.

Yeah, that's right. Mr. Blaine's got a question. Has COVID helped or hindered efforts for additional M&A? It's certainly made it more interesting. When this all happened, I think one of our assumptions was as well, We think we're well poised to get through this. Perhaps there's other entities that are not. So we've definitely been on the lookout just to see if anything pops up that was either a previous opportunity that didn't pan out or something new. overall the challenge has been sort of twofold the first is is that um like us there's a number of companies that um uh that may have done well or not so well during this and i think you have to look at that when you're thinking about a long-term roi on the company but the biggest challenge to be honest with you um is just meeting the people i mean it's almost impossible to do and of course you can have lots of zoom calls with people but you know When we've talked about Martin and Adam, one of the things that we emphasized in the narrative that we discussed with you guys about why them was the people and the culture. And that's a really difficult thing to really fully flesh out over Zoom. Again, we're not in any processes right now, but I think one of the things that, you know, unless it's somebody literally in our backyard, which there is no one else like Martin like that, that, you know, it's put a delay on things because it's really critical for us to be able to go out and see the people and the environment and really understand the culture.

Shall I take the next one? Yeah. Can you remind us of how your different routes to market affect profitability? So the starting point here is, let's start off with street price. So in the markets where we sell to a distributor and the distributor sells to dealers, we sell at street less 50, roughly. In the markets where we sell directly to the dealers, we sell at somewhere in the region of street price less, 28 roughly and then when we sell on e-commerce we sell at street price so there are two factors here it's not e-commerce versus bricks and mortar per se that creates the difference it's how close we get to the customer that creates the difference so the more we sell on our own e-commerce channel clearly that's helpful although it's a relatively small proportion of the revenue at the moment but also when you have on the on the regional slide I mentioned the fact that the Europe wide dealers are doing relatively well so when you've got a dealer like, let's say, Thoman in Germany, who buy directly from us and then sell to many different consumers in many different countries, effectively, there is a boost in that area as well. So those are the profitability elements around route to market, but also distributor versus dealer.

Flux production, if there are any constraints around supply chain distribution. So, yeah. I talked about this a little bit earlier and the fact that one of the challenges when you make stuff overseas is when you wanna affect any kind of change on the forecast, you're usually looking at four to six months. There's the component buy, there's the thing of making it, and then once it's actually made, it's actually shipping it and getting it out. And so you have to make some calls on there. The fact that we had both Malaysia and China available to us and up and running really helped a lot because as you remember when this whole thing happened, China basically just stayed shut after Chinese New Year. And so we were able to actually divert components and supplies down to Malaysia who did come back and were open and we were able to carry on production. That was a bit of an advantage that we had over a number of other competitors, if you will. And then, of course, when China came back, we were able to have both. Malaysia went into a little bit of a shutdown, but we were able to keep China going. And then when all that sort of just sorted itself out, we had both running. Components is an ongoing thing, a supply chain. And one of the things that you've probably read about is that there's real challenges out there in the market because like us a number of consumer electronic things have done well and many of us draw from the same raw components if you will for us i mean when you compare us to something like an apple or somebody like that we're definitely a small fish in the pond however with our contract manufacturers in our in our own little world we're quite a big fish and so we're able to actually command a lot of their attention a lot of their focus and a lot of their buying power on that and that has served us quite well

And the manufacturers have been magnificent, frankly, in their support of us, in their flexibility, in their willingness to do everything they can to help in this situation. We couldn't have wished for better manufacturers than the ones that we've got.

Yeah, exactly. So supply chain, especially components, it's an ongoing thing. In any given week, we're typically getting notified that something is going to have longer lead terms and stuff like that. I think to the accolades of our supply and operation group and the close ties we have with our contract manufacturers, we seem to mitigate those quite well. But it's something that we're consistently looking on. We don't believe we're out of the woods on that in any way, shape, or form. It's an ongoing thing that we watch like a hawk. Cool. Any others? no more questions no more questions all right wow that's good all right well we'll give it uh just one more minute on there uh all of you should have the uh the presentation um on there if uh if you have any follow-up questions you know how to get in touch with jeremy and i would be more than happy to take your uh your uh um your questions or calls after this on here uh again A really good year. I think that the thing to walk away with is, you know, we've done well. Our employees, you know, they deserve so much. I mean, we switch people pretty much worldwide to a work-at-home environment in a very short amount of time, and you know how disruptive that can be. But I think a lot of the systems and the IT investments that we've made We made that, I think, as smooth for them as possible, and they've done a great job of staying heads down. I mean, when you go back and you look over the past eight months, and we had a number of new product introductions, nothing really came off the rails because of COVID. We got them all released, and the things we have scheduled for this year are on track as well. The base is doing well, demand for the products continues to go up. And again, for the pro business is great recovery there as we're seeing growth from them again. And Martin is definitely on a path to recovery on there. So overall, we're very pleased. And as always, we're very optimistic about the future.

And there's one more. This is probably one for you. Software is still a relatively small piece of the pie, but how big could this be for you and would it be organic or through M&A too?

Yeah. Well, it is a very small piece to us right now, but it's something that we see the possibility of it being quite material. So when you think about the number of people that are buying a Scarlett Intervace or a Launchpad every month, you know going through our onboarding journey we have sort of first dibs on introducing them to a bunch of different software tools amplify studio again is one piece of that why it's very kind of focused on the electronic music creation on there there's a very robust backlog of features to add to that to make that a really great complement to scarlet as well and you'll see those start to materialize over the course of this year So there's a number of organic things that we're doing. But when it comes to M&A, absolutely, software is a big part of what we're looking at. To round out everything we want to have in terms of a complete workflow and ecosystem, if we tried to do it organically, it would take us a long time. Building on the things that we're already working on like studio and stuff like that there's there's a number of things that we could see acquisition. Being the means to the end to get us there on there so absolutely when we look at. All of our sort of our acquisition backlog, if you will, it's a very balanced list between both hardware focused companies and software focused companies.

Thank you very much. If there are any more questions, then I think we'll call it a day. But Tim, Jeremy, thanks so much. Another great set of results and well presented. And as I said, if anybody's got any follow up questions or wants to talk to the team, then feel free to get in touch either with myself, my colleague Lou or directly to the team. But thank you all very much for your attendance. And we look forward to speaking to you again in six months time.

Thank you. Thank you, guys. Bye bye.