Cd Projekt Sa Unsp/Adr

Good afternoon, good evening, ladies and gentlemen. Thank you for standing by. Welcome and thank you for joining CD Projekt Group H1 2022 Financial Results Investor Conference. Through our today recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your telephone. Please press the start key followed by zero for operator assessment. It is my pleasure and I would now like to turn the conference over to Mr. Adam Kicinski, president of board and joint CEO. Please go ahead, sir.

Thank you very much. Good afternoon. Welcome to CD Projekt Group's 2022 half year call. I'll start with a short recap of the highlights for the period. Then, I'll move on to recent announcements. In the second part, Piotr Nierubowicz will cover the financials. Michał Nowakowski will join us for the Q&A session after the presentation. The webcast of the presentation, as well as the audio feed, are streamed live on our corporate website and our YouTube channel. Let's kick off with a summary of the key production milestones. In Q1, two separate CD Projekt Red teams were already working on two AAA projects. One team continued development of the expansion for Cyberpunk 2077. The other started pre-production of the next Witcher game. On top of that, we continued working on improving Cyberpunk. In February, we released patch 1.5 along with the next-gen version of the game. The positive response we received proved that we are heading in the right direction. Following the next-gen patch, we continued working on the 1.6 update, which came out yesterday. More on that later on. Back in March, we announced a strategic partnership with Epic Games. Our future productions will now rely on Unreal Engine 5 and its potential next versions. We had also used this opportunity to announce work on the new Witcher Saga game that I've already referred to. As production of the game began, at the end of Q1, the corresponding development costs started being capitalized. Now let's move on to the recent project announcements. We are super excited that Cyberpunk Adrana's anime series is coming to Netflix on Tuesday, next week. We've produced it in collaboration with Trigger the acclaimed Japanese anime studio. So the project was responsible for creating the story while Trigger adopted it to anime format. The first impressions of those who had the opportunity to watch the series during the recent PAX West are very encouraging. We believe the series will broaden the interest in the cyberpunk world and bring new players to the game. Indeed, this format provides a perfect match for the Cyberpunk universe. Now let's move to slide 4 and focus on patch 1.6 called the Adranes update. It brings anticipated features to the game. New weapons, wardrobes, cyberwar customization and the Adranes content, to name just a few. With this new update, we also rolled out a set of modding tools to Cyberpunk called Red Mod. Thanks to this, it's finally possible to modify practically every system and any aspect of the game. So it opens countless possibilities. Another thing we added is a performance mode allowing users of Xbox Series S to play the game at 60 FPS. This has been one of the most highly requested features by our community and we are very happy to introduce it. Moving forward, we decided to focus our attention and resources on the new gen versions of Cyberpunk, so we can further develop and upgrade the game on PC, Stadia, PlayStation 5, and Xbox Series X and S. Of course, the game will continue to operate on previous gen consoles and will keep providing technical support. Let's move to slide five and recap basic facts of yesterday's announced expansion. We decided to develop one major expansion to Cyberpunk 2077 titled Phantom Liberty. To provide the best possible experience and great new features, the expansion will come to next-gen and PC only. The release is planned for the next year. Now let's move to slide six, presenting the current allocation of our developers. As you can see, the largest team is working on Phantom Liberty. And the second project is on the new Witcher game. You can also see that the share of developers working on the Murasa's Lab project has grown significantly since the end of 2021. At the same time, the GWENT team was adjusted to the scope of the game operations. And a small portion of the team continues to work on the next-gen version of The Witcher 3. Speaking of which, moving to slide seven, I can confirm that this game is on track to launch in fourth quarter this year.

Stay tuned.

Now let's move to slide eight. I am happy to invite you all to the presentation of the CD Projekt strategy update. The event will take place in October with details to be provided in upcoming weeks.

We are eager to share our long-term vision and business outlook.

Can't wait. Now it's time for the financials. Piotr, the floor is yours.

Thank you, Adam. Now I'll guide you through our results for the first half of 2022. So let's start with slide 10, consolidated profit and loss account. In total, our sales revenue reached 378 million zloty, which is 20% lower than for the first half of 2021. As you may remember, in H1 2021, we were adjusting our sales and cost provisions created after the release of Cyberpunk. As a result, in the first half of 2021, nearly 40 million slots in sales provisions were dissolved and slightly over 40 million in cost provisions were created. This led to an increase in our costs as well as revenues reported last year. It's also worth mentioning that the reference period immediately followed the release of Cyberpunk, when the high post-release curve in sales of the game could still be observed. And this year, during H1, our revenues from sales of products supported by the release of the next-gen edition of Cyberpunk reached nearly 286 million zlotys. Revenues from sales of goods for resale and materials mainly represent GOG business. The total figure here decreased by 9%. The main measurable reasons for that are, first, revenue booked by GOG on the PC version of Cyberpunk was naturally lower than last year as the next-gen update mostly influenced our console sales, and last year we were still in the post-release curve. Second, this year the digital store recorded lower revenues from new releases from external partners as some of the new releases planned for H1 were postponed. And third, suspension of sales to Russia and Belarus added a bid on top of the above. At the same time, and this applies both to Telepriority Credit and GOG, where the bulk of sales is denominated in U.S. dollars, converting our revenues to Polish Zloty benefited from the increased exchange rate of the U.S. dollar versus Zloty. Costs of products and services sold amounted to 37 million Zloty. As mentioned a minute ago, the high figure reported for H1 2021 included adjustments of cost provisions in the amount of over 40 million zlotys. Apart from that, both this and last year, most of the reported amount comes from amortization of past expenditures on development of Cyberpunk. However, this year, unlike last year, we no longer have amortization of initial Gwent development activities, which had already been fully amortized by the end of 2021. Cost of goods for resale and materials sold came mostly from GOG and decreased in line with sales or even a bit more. All in all, our gross profit on sales exceeded 276 million zloty. Moving to the operating costs. In 2022, our selling expenses decreased to 101 million zloty, which is nearly 30 million less than a year ago. The amount reported for H1 2021 was largely influenced by our involvement in servicing Cyberpunk, which, as we indicated previously, was expected to decrease this year. And this indeed happened, from nearly 48 million zloty last year down to 15 million this year. The selling expenses line also includes over 27 million in expenses associated with, proudly speaking, our Cyberpunk publishing activity, mainly as a consequence of the NextGen release campaign. Next slide. In H1-2022, we also saved on administrative expenses. The decrease was driven by two main factors. First, expenses related to the valuation of the stock-based incentive program, which declined due to the change in our estimates regarding the likelihood of meeting the results of the program, which happened at the end of 2021. And second, we can observe a decrease in early first phase research expenses related to our future products. That occurs as we progress to more advanced phases and further expenses are capitalized and expenditures on development projects. Moving further, although our total sales revenue decreased by 20% versus last year, our EBIT actually grew by 12%. This result was primarily driven by CD Projekt Red. However, GOG also posted close to 2 million zloty in EBIT profit, unlike last year when the result of the segment was negative by nearly 5 million zloty. This significant improvement was made possible by reorganization and optimization of costs performed at GOG in recent months. This year, the balance of financial activities was more favorable to us. mainly due to the recent increase in interest rates, allowing us to add 16 million zloty to the total result. At the same time, same as in Q1, the reported income tax for the period and the effective tax rate were higher than what we had observed in previous years. The increase was mainly caused by withholding taxes paid abroad by our international licensees. Having received confirmations of withholding tax payments this year in accordance with existing treaties concerning double taxation, we deducted from our local corporate tax liabilities as much as was allowed. Obviously, the local R&D tax relief and IP box tax regime, which allow for preferential local taxation, give us less capacity to deduct foreign withholding taxes. The excess withholding tax, which we could not deduct locally, was recorded in our P&L statement. The total amount of such excess in H1 this year reached nearly $25 million. This amount is related mainly to licensee royalties collected after the release of Cyberpunk, for which the corresponding tax payment confirmations were delivered to us this year. All in all, our net profit for the first half of 2022 reached $114 million. The absolute figure increased by 8% versus the comparative period. But what is worth mentioning, however, is that our net profitability grew from 22% to 30% year-on-year. And for CD Projekt Red alone, it even exceeded 38%, which means that for each 100 zloty in sales revenue, 38.4 zloty remained with us as the net profit after taxation. Let's now move off to the next slide, number 11, our consolidated balance sheet. In H1 of 2022, our balance of expenditures on development projects increased significantly by nearly 84 million zloty. This figure represents the balance of new expenditures on development projects for the period of 121 million zloty, less amortization of past projects in the amount of nearly 37 million zloty. I will come back to expenditures on new developments in a moment. Another noticeable increase among non-current assets is presented in the shares in the non-consolidated subsidiaries line. The increase by 28 million zloty was driven by our capital contribution to Spoko, as well as the increased valuation of previously acquired US shares in the Molassos flat, as a consequence of the US dollar getting stronger versus the zloty this year. At the same time, looking at current assets, our receivables decreased by nearly 122 million zloty mainly due to a natural cycle after Q4, a decrease in tax receivables and a decrease in prepayments for development projects. The total value of cash, deposits and T-bonds included in the three items marked with an asterisk is summed up under the table and totals 1,178,000,000 Zloty as of the end of June 2022. This means that our financial reserves grew by 24,000,000 Zloty during the first six months of this year. Let's move on to the second part of the balance sheet, slide 12. As of the end of H1, our group's equity had a value of nearly 1,903,000,000 Zloty and grew by nearly 9,000,000. The main counterbalancing drivers should be mentioned here. Two main counterbalancing drivers. First, an increase related to our profit for the period. And second, a decrease related to 101 million Zloty dividend for 2021 approved by the General Meeting just before the end of June. Another change affecting the liabilities section at the end of June 2022 involved the liabilities themselves, which increased by nearly 92 million zloty. And again, this was related mainly to recognition of our liability to pay out 101 million zloty dividend approved by the General Meeting before the end of June and paid out in July. As regards provisions, we no longer have any post-release saved provisions. Our cost provisions decreased by nearly 49 million zlotych in the first half of 2022. Those related to team bonuses decreased by nearly 23 million zlotych due to 2021 bonuses being paid out in Q2 of this year, while other cost provisions decreased naturally by 26 million zlotych over the first half of 2022. Now, please move on to the next slide, number 13. To the project's expenditures on research, development and service of released games are presented quarterly for 2021 and 2022 to illustrate the changes happening at the studio after the release of Cyberpunk. The yellow part represents our total cost of servicing our released games, mainly Cyberpunk and Gwent. Although we continue to support Cyberpunk and patch 1.6 was released yesterday, The team is progressively moving on to new projects, and so this allocation continues to decrease. A similar situation can be observed with early phase research work, represented by the green slides, which is actually barely visible in Q2 2022. At the same time, the share of the team developing new projects is on the increase. This is represented by the blue part, development phase of new projects. And this time, since the development part is bigger than usual, we have three shades of blue to present it in more detail. The dark blue part at the top shows the amount related to outsourcing costs of the next generation version of The Witcher 3 we booked last quarter. The medium shade of blue corresponds to outsourcing expenses related to cyberpunker genres, mainly due to a shift in its status from prepayments for development projects to capitalized development projects. as the anime series has now been delivered by our partner Animation Studio Trigger. In both cases, we are talking about kind of one-time events related to finalizing works and projects handled by our outsourcing partners. And finally, the blue part at the bottom represents our typical development activity and its growing scope. And now our simplified cash flow on slide 14. Cash-wise. The 140 million zloty net book profit for the period was supported by over 43 million zloty in depreciation and amortization for the period and nearly 73 million decrease in receivables over the first half of 2022. The main outgoing cash drivers not included directly in the P&L statements were nearly 43 million zloty decrease in liabilities and provisions, Actual expenditures on development projects in cash terms, nearly 90 million zloty. Purchases of intangible and tangible assets at over 25 million zloty. Increasing prepayments and deferred costs by nearly 20 million zloty. Mainly driven by new distribution contracts concerning future games releases signed by GOG. And actually, among others, this position includes a contract with a new important partner of GOG, SEGA, and it covers a wide catalog of SEGA games, some of which are already available on GOG. And last outgoing cash driver is a capital contribution to the Spoko company, which is excluded from consolidation. The contribution allowed Spoko to pay back its loans to CD Projekt and the net effect of these two types of transactions amounted to 17.5 million zlotys. Altogether, our financial reserves increased by 24 million zloty, reaching 1,178,000,000 zloty in cash, bank deposits and T-bonds as of the end of June 2022. The increase was generated during the first quarter, mainly thanks to the collection of our receivables for the preceding fourth quarter and for the February next-gen digital release of Cyberpunk. In Q2, we paid out our annual team bonuses for 2021, and incurred over two-thirds of the increased expenditures on development projects for the first half of the year. This is all from me for now. Thank you for your attention. We can now proceed with the Q&A session.

Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star followed by one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star followed by two. Anyone who has a question may press star followed by one at this time. One moment for the first question, please. We have the first question from Nick Dempsey from Barclays. Please go ahead.

Yes, good afternoon, guys. I've got two questions. So first of all, when I'm just focusing on the sales of products line, you saw in the first quarter 174 million, second quarter 112 million. When I'm thinking about that line in particular for the second half, am I right in thinking that you normally have seasonally lower Q3 and there's not really any other factors that would moved that number up. And then in Q4, the only factor that could change it is the Witcher 3 next-gen update. Am I missing anything other than those factors when I'm thinking about how to model Q3 and Q4 sales of products? That's my first question. And then just on the second one, slide six, it looks as though as of the 31st of July, there was really only a very small team working on the next-gen version of The Witcher 3. Have you stepped the team up since then, or is it just that it was more or less complete when you picked it up from Sabre? And are you still very confident of releasing that in Q4 of this year?

Okay, so I'll start with the first one, question about sales of products. Yes, typically Q3 is the lower season of the year for us, and typically Q4 This is the high season of the year for us. As far as the Q3 is concerned, the main customer-oriented events on our side are the release of the new 1.6 patch and also the premiere of the Cyberpunk Edgerunners series on Netflix. Obviously, they do not directly drive sales. I mean, it's not the premiere of the new game, but it is the release of the new event. and we dedicate a lot of communication to both events, the Edgerunners update for Cyberpunk. And the main event for us for Q4 will be the Witcher 3 next-gen release, which as Adam confirmed, is planned to happen by the end of the year in Q4.

So answering the second, the team is proper because when we take over the project, it was not ready, of course, but the main works were very highly specialized technical works. So there was a group of professionals proper for the tasks and finishing their works. And yes, as we said, we are on track to release the game in Q4.

Okay, thank you. That's great.

Thank you.

The next question is from Omar Shaikh from Morgan Stanley. Please go ahead.

Good evening, everyone. I've got a couple of questions as well. Maybe first of all on the next Witcher game. Could you just update us on where you are in the development of that game? How far through are you and do you still anticipate it will take broadly three to four years to develop? And also, is that game all being developed on Unreal? Just be helpful as well. That's the first question. And then secondly, I guess on the Cyberpunk expansion for next year, again, a similar question, I suppose. Where are you in the development of that? How's that going? How's the game? How's the expansion currently looking in terms of the development process? And are you broadly targeting just at some point before the end of the year? Or can you be a bit more specific? Thanks.

Hi, Omar. So answering the first question, we are in pre-production phase, as I said. So this is the first phase of development. And as for now, we have a needed team and we are in line with the plan. but commenting the total time of the project. I can't comment the total time of the project, but as for now, we are where we should be, and the game is being developed on Unreal Engine, as we said. On expansion, Of course, the situation is very different. Expansion is the last project developed on our own technology. And, well, we are where we should be at this stage. This is a very advanced stage, so with the bulk of our development team engaged in the project. I can't comment anything about days. We keep saying that this will be next year. And, well, it will be a time for the further announcements.

Okay, thanks. And just one follow-up, if I could, on The Witcher. You referred to a new Witcher saga. So are you now talking about multiple new games? So just maybe if you could elaborate a little bit on what you mean by that.

Sure, we said that there will be a new saga, but of course now we are pre-producing the first game of this saga. But we have in mind more than one, so like the first saga were three games, so now we are thinking about more than one game, but we are in pre-production of the first game from the second Witcher saga.

Got it, okay, thanks very much.

Thank you.

The next question is from Mati Lytanen from Bernstein. Please go ahead.

Hello, good evening. Just on the parallel development beginning, just to check if I'm reading the charts correctly that capitalized parallel development on those two products started in Q2. Are we talking about a Witcher game and another AAA project? And if so, you had a statement in the press release about revisiting a world which is an integral part of CD Projekt history. Just checking, was that statement referring to the new Witcher saga game that you mentioned, or another game? Then, now that we've got the Phantom Liberty trailer out, and the next year's release date. Could you give us an update on, if there is one, on what the plan is for any subsequent sort of major expansion DLTs for Cyberpunk? Is it too early to say or should we expect a similar couple of expansions as we got for Witcher 3? Thank you.

I'll take the first question about capitalization. No, actually the capitalization started early. One project at the end of 2021, beginning 2022, and the second one in Q1 2022. And I'm talking about two projects since one is the next Witcher production, but we also work together with the Molassa Slot on their project and it's It's also part of the capitalized expenses.

And to add in one more thing, referring to parallel development, instead of break red, I meant development of expansion, which from the production perspective is fully AAA development and together with this parallel we started development of the next Witcher game.

Got it, very helpful, thanks.

Hi, and this is Michał. On your question on the further expansions for Cyberpunk, we decided to develop one major expansion for Cyberpunk, which is going to take advantage of all the capabilities of the new gen consoles. And... Having said that, we're totally fully committed to developing the Cyberpunk IP further. So beyond this particular Cyberpunk expansion, we choose expansion. We've put a lot of effort and time into building this franchise, and we definitely want to continue to build upon what was built right now with new stories, new experiences, new content, basically, not just the video game. format, and I'll leave it here. So, in terms of expansion, this is going to be just one major expansion. However, there's going to be new stuff in the future.

Got it. Thank you.

The next question is from Matthew Walker from Credit Suisse. Please, go ahead.

Thanks a lot. Thanks for taking the questions. Just two questions, please. The first is, you know, when we're thinking about the potential sales from the Cyberpunk expansion, should we be using the sales from the Witcher 3 expansions as a guide? Is that the best? Is that the best thing to do? Or is there another sort of methodology that you would that you would recommend? And then the second question is just I think in the past when you've talked about industry consolidation, you've always said that you want to remain to sort of run your own franchise and essentially make sure that you fully exploit Cyberpunk. Is that still the case? Is that still your thinking?

Okay, I'll take the first one. So the question is about the potential sales of the expansion. So we've never been big about leading on the actual sales. I guess what I can say is we believe we have a great expansion on our hands and we have really ambitious goals. However, in this case, it's important to remember that we're targeting the next gen and the PC fan base of the next gen, new gen consoles owners and PC owners. So that's an important factor to keep in mind. And I think that's pretty much as far as we want to go. Important thing to maybe remember is that we're also looking at like a long-term sales. What adding this expansion is also going to do for the sales of the base game, any potential complete additions and so on. Look back in the Witcher 3 history when we've done similar books and that's probably going to give you idea. Again, I cannot really specifically comment on the actual numbers, even in terms of percentage and things like that.

Answering the second question, yes, definitely. Yes, we haven't changed our strategy, and we are focusing on building and doing franchises. We are focusing on bringing more and more content to our franchises, having, of course, AAA games in the center of our franchise flywheels.

Just a quick follow-up. Have you had any thoughts around how the cost of living crisis could impact the company going forward?

So, of course, the cost of living and inflation impacts wages, that definitely, and this is not the only factor, but We see that wages are rising. Last year, the average rise was 23%. This year, we are expecting the same trajectory. So similar trajectory. So costs are rising. And on top of that, we have new factors like working from home, which is, on one hand, opportunity because we can hire people from around the world. But on the other hand, wages are more and more global and we have to adjust to it.

I meant really, you know, impacting the consumer demand. So basically, if inflation goes up, energy prices goes up, you know, consumers got less money. How do you see that impacting the sales of the games?

Hi, so it's Michal. Of course, you know, we're not fortune tellers. And you know, the situation the world is in currently, on so many fronts is rather unprecedented. I think we can agree on that. Having said that, you know, previously games were rather, you know, crisis proof. But again, nobody can tell what is going to happen having said that we have not with everything that's happened so far, we have not really seen any negative impact to ourselves, to be perfectly honest.

Okay, thank you very much.

And I can add one more thing. We are actually providing our customers, gamers, with a fairly cheap entertainment, considering that our games are for tens or sometimes hundreds of hours, and they pay for which are $340 or $20 on promotions for cyberpunk prices is very attractive as well. So they get a lot for a very decent price.

Yeah, yeah, agreed. Thank you. Thank you.

The next question is from Saim Saed from Berenberg. Please go ahead.

Hi there, thanks for taking my question. Just a very quick one on your player base and its split across different console types. Could you provide an indication of what percentage is on next-gen consoles and PC?

Could you repeat the question again?

Sorry, I think we were... Just in terms of your player base, do you have an idea of the split of the active player base that are on next-gen consoles and PC?

So, yes, I mean, we do have, of course, obviously very good idea in terms of PC. In terms of consoles, that visibility is not as simple as with the PC. However, we do have insights into that. Yes.

And would you be willing to share that? Would you say the majority of console players have shifted on to next gen or are they still on original Are they playing it on an original or the previous generation of console?

No, we're not really providing guidance on that kind of stuff. Some of that information is also, you know, console-specific confidential, yeah.

Okay, thank you.

The next question is from George Brown from Deutsche Bank. Please go ahead.

Hi there, thanks for taking my questions. I have two if I may. So firstly, in terms of the Cyberpunk expansion, what sort of price can we expect from this or will these details be shared at a later date? And then secondly, is there any potential for any future platform deals to bring Cyberpunk to Xbox Game Pass or PlayStation Now as sort of a subscription service as well? Thank you.

Hello again. So I can take these two. So the first one was about the price. So we're obviously not disclosing price at this moment in time. Of course, we're going to reveal that at an appropriate moment. Having said that, we did mention this is the major expansion. It's actually pretty sizable, and we're happy with its quality. So the price is going to be according to what we're going to present to the players, basically. As for the second question, are there any potential deals on Xbox and PlayStation? Well, we've done some deals in the past, but obviously, if there's any deal happening, we cannot really talk about it in the future. And if anything is going to happen, it's going to be at a proper time. We don't have anything on that matter to share here now.

Thank you.

There are no further questions from the call. Perhaps we have questions from the webcast. And I hand over to Marek.

Yes, the first question was from Piotr Poniatowski from mBank. How many developers in total did you employ at the end of June 2022? Yeah, so the answer is we have almost 800 developers in the group, excluding GOG.com developers. We have approximately 730 working on different projects.

The second is from Piotr Zielonka, Santander Bank. When looking at OCF in H1, your OCF was decreased by 50 million zlotys charged in provisions. Could you please comment more on this line of OCF? What exactly sounded this line of cash flow, cash flow statement? Is this linked to cash provisions linked to salaries, bonuses? Piotr, I think it's for you. Piotr, we'll come back to this question in a second. I will take the next one from Tomasz Rodak, Don Matleski boss.

Okay, I'm ready. Sorry to jumping back. So there were two main factors for the decrease of provisions. One, each year we set provisions for the annual profits for the team and we accumulated quarter by quarter based on the results of the quarter. And then once the year is closed, we have the results for a year, we pay out bonuses. And so it happened in the second quarter of this year, we paid out bonuses for 2021. And the second part was related to standard cost provisions we set at the end of 2021. And I would say that the provisions were consumed naturally. There was nothing surprising. We provisioned certain costs that materialized in 2022, and hence the decrease of the provisions.

So, coming back to the question of Tomasz, how does shifting to a new engine work for you? We've just started, but the agreement was followed, it was after very detailed evaluation of the future plans of Epic Games and plans of development of Unreal Engine and we believe it's a perfect match for us to use this technology. and on top of of that unreal is known for great tools for developers so we believe that some processes and pipelines should be more efficient once once we are fully fully introduced to the technology now we are running workshops and we are still learning but but on the other hand there are much more

Next question from Katarzyna Kucharczyk-Parkiet.

Why do you want to update strategy? Will there be major changes in the directions of the development? What should we expect?

So, no, you shouldn't expect any major changes. I mean that the strategy stays the same, but we want to share our vision of the future. We want to talk more about future plans and how we want to run the business, because the previous update was mostly focused on the transformation. Now we believe we are ready to talk about our business outlook. So we are finishing our conference. Thank you very much for the participation and stay tuned. And as I said, in the next weeks, we'll invite you to our strategy update, which will take place in October this year. Thank you. Bye bye.

Ladies and gentlemen, the conference is now concluded and you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.