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spk_0: the day everyone and welcome to today's signing are very singing story second quarter earnings call at this time all participants are any listen only mode later you will have an opportunity to ask questions during the question and answer session you we register to ask a question at any time by pressing the star and one on your touched on phone please note this call is being recorded i will be sitting by should you need any assistance it is now my pleasure to turn to per room over to burden hopkins
spk_1: hi good afternoon everyone am that you take the time to join us we have a quick safe harbor and we'll get to it except resort information contained herein statement convert car we're looking statements in a it was safe harbor provisions of the plight of scary litigation reform act nineteen ninety five for to be statements about no no no reason uncertainties which may cause actual results of the agree to differ materially from forecast results with that said electronic all over to gary items and ceo the singing shit coffee
spk_2: thank you brandon good afternoon everybody this is gary yeah concerned i'm the ceo decision am i have also with me this afternoon line or much t company cfl and been of mellow vp of global sales and marketing i do want to thank everybody for taking the fans afternoon she listen and as we give more detail on the status their second quarter for those that have you seen the numbers came out this morning the released in a second quarter can queue obviously this was a great quarter for in the shade were very very pleased and happy to be back on track we were successful in a couple of different areas first one day we were able to grow topline sales during the quarter as well as the year to date six month period we were successful in expanding our margin and also reducing expenses and all those things teacher did it to a strong bottom line is quarter i'm gonna be turning the call over the line or is going to give us a deeper dive into the second quarter financials and after that would ensure the call over the bernardo he's going to get us not take on sales do that now turned over the line
spk_3: okay thanks guys afternoon everybody i'm like the resources earnings for second quarter hash out a strong for here
spk_4: like to do some of the highlights of right now on net sales for the quarter we were times when we were about three point one million dollars at twenty three main one eighty seven vs twenty million only to i hear the pop up again twenty six five eleven vs twenty four ninety one to one point six me and i'll pick up op the carpool karaoke product considered at approximately one point one million dollars quoted to date and point nine me almost a million dollars isn't a to those increases and also few we call me not recall last year we had a damaged goods incident with walmart that hurt our sales by one point five million dollars and that we don't have a repeat performance of thank you very much so that helped us in terms of beating our sales for last year six water as was yesterday
spk_5: or for the quarter the internet the demand for a product is strong all about a half a million dollar increase in
spk_4: that category
spk_6: on and get a date when you're looking at carpool karaoke no damaged goods from my share those to the hof set five are we didn't do business with jc penney minimal business with jc penney the years compared to last year so that that two point four million from couples no damaged goods was offset with on and know
spk_3: business with or little business with savages are gross profit margin on sixteen million sixteen point four million for watching point four million it's a two million dollar increase cross karaoke contribute approximately six hundred thousand house to that know damaged goods incidents that was another three hundred thousand dollars and the rest of that was primarily due to not only as increase the increase in sales but also a pick up in gross profit margin
spk_4: had a date ah seven million nine sixty nine vs six nine six hundred and thirty pick up of one point three million
spk_6: same same situation there are half a million dollars related to carpool karaoke know damaged goods for three hundred thousand dollars in the sales increase cent increase in gross profit margin
spk_3: was the up are the reason for the increase their are gross profit margin percentage was twenty nine percent versus twenty point one percent are point nine point margin pick up our most of that was due to carpool karaoke which carries a significantly higher
spk_4: march and rest of our normal product get a date or thirty percent gross profit margin vs twenty six point six a three point four point pick up in march against carpool karaoke check out had a lot of
spk_6: contribution to that and also that mix of products sold had a lot to do with the difference
spk_3: in the and the increase in the gross profit margins
spk_4: from as several administrative expenses we're talking about one million eight hundred and forty two thousand versus to two and three hundred thirty five thousand officer three hundred ninety three thousand dollar a decrease of we had that some of you may recall last year we had bought some special counsel the insurance for jc penney and one hundred and thirty five thousand dollars since we didn't do business with jc penney this year we didn't need to change we didn't need to repeat that and there without a pot and damage was damaged goods
spk_3: yeah pocket costs approximately two hundred nineteen thousand dollars
spk_4: so are those two things on top of the fact that we traveled that we saved quite a bit and travel and entertainment due to not participating shows shows get cancelled and obviously with stay close to home is the same thing is a day
spk_3: i'm not afraid of was three point two million first three thousand six were down by four hundred one thousand same reasons the insurance one hundred and thirty five thousand up for jc penney two hundred nineteen thousand about pocket damage and savings substantial savings on problem entertain
spk_4: select expenses are it two point three million dollars in a prayer in the of versus two point five million dollars in the current about one hundred and eleven thousand dollar difference we have a lot less marketing about three four hundred thousand obsolescent marketing for the rollout of the carpool karaoke our products which we spend quite a bit unless you're and because it has taken off the she had that was offset substantially by royalties going out for the carpool karaoke it's the same same reasons for the a date or decrease two point nine million verse three point one million about two hundred thousand dollar difference
spk_3: and the same reason as the
spk_4: according quality income from operations two point four million dollars versus eight hundred and fifty nine thousand dollars last quarter for one point five or almost a one point six million dollar increase he had a date one point seven million dollars versus a two hundred forty three thousand dollar loss last year we have and that's about one point nine million dollar ticket
spk_7: other income you'll notice is a lot of other income
spk_4: the line of operations there has to do with all of the damaged goods issues that we had last year we had a recovery from our insurance company we also had a pick up of about three hundred ninety thousand dollars from one of them the manufacturer that cause the damage so we picked up approximately nine hundred thirty six thousand dollars as corner
spk_8: and ah one point almost one point five million dollars and recovery he had a day
spk_4: other expenses of note or interest has gone up because we didn't lose our or deal with pnc bank and had to take another another financing route er costing us or more in interest as yourself as about ninety five thousand dollar difference i quoted to date is about twenty five thousand dollars a year to date of additional interest and information on fine into for financing costs net income two point four million dollars for the date for says six or twenty four thousand dollars last year pick up a one point eight million dollars and yesterday to two point two zero one vs a loss of children forty five thousand dollars i sure as a to me and four hundred and twenty six thousand dollars net income just one more item of know where we're experiencing very very strong demand for to karaoke at the end of the year we ended up pretty heavy an inventory we're probably about you happening and all that remained dollars in excess inventory were happy to report a half of that was was the carpool karaoke were happy to report that the demand for karaoke just a extraordinarily strong arm and just to give you an example
spk_9: ah at this point this year versus last year and inventory we have currently or at the end of september we had approximately eight point to my knowledge and inventory first as a mentor in the prior year of fifteen point one million dollars that's about seven million dollar decreases inventory
spk_4: not all about is if it is due to the sale but a lot of it is the excess inventory going away any excess demand that we had so we should end up the year pretty light tory after everything is done and will let the salesperson talk about her
spk_2: going on in a market what's driving some of well as my report thanks thank you i don't great numbers appreciate the the report on that so at this point we're going to turn it over bernardo the will give us
spk_10: some of the success stories that we've seen through the second quarter and talk a little bit about what we're seeing right now in the market as we enter our peak holiday season so
spk_11: a turn of the you brought up he has been going on over some of the numbers you know some of them as a as a cupboard to out if you because this year so lot of focusing more on sell to another we're getting the job numbers of her well into the season i'm gonna sorta with amazon who the you know for usually thought that they would they would be the one that would benefit the most from the causes from towards runs the summer things that we doing and and there was snow starting to to pick up some of that but this year the the the so have really taken off on amazon i'm you know so i first want to focus on the point a success we had this year we would he promoted to carpool karaoke on a prime day amazon gave his excellent location on the page the also performed a qb see type of person you know video online with interaction with the below with the prado ten and two people discuss today and they had an online tickers for for the product and and they bought into a about sixty thousand pieces in for for the point a deal of which we kept it in you know we we we thought that that would take almost a data to go to those numbers is so through and listen to elicit two hours so a lot of people were excited about that we got a lot of compliments from the amazon upper management team as one of the more successful nine amazon product branded brenda products online i am and it's it is it so well that the the just bought into and you're gonna run to see promo now to cyber monday so please be on the lookout for that i'm you'll see the timeline as as yet to be announced but we'll have another similar program on cyber monday and is already bought into the inventory for that so we're really excited so just just to let you know what aiming you to date ourselves to already is of hundred and forty percent increase from the last year so we are well on a way to hitting what is that number was a we thought a few years back would be and and will really excited that that amazon is is is getting behind our brand not only with the to karaoke but also the residual arm of sex got a has on say commission cousin people click on the same mushy brown and and and all of our products a good you know just just give you an example or on youtube we received close a million dollars in order this week from from amazon and and does above and beyond for cash on me we are struggling a little bit to fill some some of those orders because of lack of inventory due to a lot of the demands of but you know where where we are shipping everything that we have ah i'm available to them because are just succeeding those numbers on a safety system works for you to walmart dot com as you guys know oh my god common walmart now a complete or be channel so or walmart store team is the one that we deal with also on dot com said we rolled out the black friday this year a lot sooner i'm at walmart did about three or four different tiers of of blood fight instead of doing it off on the weekend of of thanksgiving they they started putting the promos out
spk_12: beginning week november week one and we were part of the november week one program and already we see some incredible numbers are interesting of know that has put a walmart dot com numbers are hundred and seventy percent increase from last year
spk_11: get a date and also bomb were seen a lot of people buying a product of picking it up at store or shipping from stores so we no longer have to sort of carry the burden of doing drop ship at a warehouse is a lot of that stuff is going right out of the walmartstores arm or people picking it up in the stores because of the system that they have that had this it has been really positive was all and so will continue to see the success or walmart dot com during our conversations with them these admitted that they probably ordered seventy thousand pieces less that they should have on the in like products and that was just because of the beauty year the dodgers over to be conservative but that the bad has continued on and you know one of the common from from the biting there was a would not be devastated mention of issue the issue that success continue to go with to machine so that the going to i'm
spk_13: to focus on on on fixing that the next year but the numbers are still good i'm going to idol with the sam's club
spk_1: we we are seeing
spk_11: it continued success with all of our products they're like adventure before we were up to five products this year with sam's club bless who really the three and an easy to eat it was summer or sell booze on a summer program was were about thirty two percent this year and or start menu item has continued to double in in sales so far so will be completely clean on on on the sam's club number on on most of the items on the goodbye to the hyun pedestal that has been steady you know not not not on the as soon as well as cause college but also cause cause he chose one product they're five so that's as to be understood on costs as well with the with the pedestal
spk_13: don't see the number they are indebted there of one eighty nine we tell were last year the product as one sixty nine and we have not seen a drop in sales at all as a matter of fact we've seen an increase in sales even though that the the price point has been higher so that bodes well because it's so true why fi plot of
spk_11: the we talked about before and and the boy given self commitments for twenty twenty one as well concerned with satisfied with what what what how's that going let me see our bloodshed numbers are still lost over three hundred percent you know i'm so that that that's been going well or smc direct to consumer business as the not a dutch may be triggered by cotton karaoke arms out some influencers on tick tock i'm going into videos and promote and promote the items right on cnbc website which is
spk_13: margin for us
spk_11: i'm and and that businesses up over five hundred percent are mostly triggered by coughing karaoke like like or mentioned before the margins have the great the be triggered by by copy karaoke but also we have you ever had to pull up this is this your you know i'm where we were in such a good inventory composition that that we haven't had to close out business know the north end of life products we've been able to sell much of a pretty much a margin so that does contributed to for the so for the quarter you saw an increase in margin actually when you get out of walmart and you
spk_13: of that item that bad margin to be almost even up to about thirty to thirty percent so on is that doubles well for us because
spk_11: like i said we haven't had to close out any any particular items
spk_14: i'm was one with welded in a in australia on and dumb and and that does is has grown internationally has been slow as you guys know your have been a shutdown so that the you know international some of the european business and slow down for us but but think thankfully the you as such as
spk_11: picked up on that side i'm a nice me out liners you mentioned the we have we been to the jc penney to see we did do business which a secret is the only difference was that it was a prepaid business
spk_2: where they had to pay up front for the goods saw this was a fraction of what did not use this as worthless but we are doing he still did manage to do some bitches adjacent any to just had to prepare for the good before we should stop by w side of i miss anything i'm sure very will cover it and not have as little baxter or been our thank you so much great great report that numbers i am i want to be my fourth time so we have a chance to answer questions that anybody has questioned source that i also just wanted to quickly touch on black friday this year i'm obviously and in recent years you seen singing machine heavily promoted almost every single major retailer on black friday this year obviously is is unusual circumstances right with the pandemic so a lot of retailers have sort of fact peddled a little bit away from making black friday such a huge event we did participate obviously with walmart in the annual of that they started running back promotion early so they've been running that now for two weeks and the seltzer has been very very strong exceeding expectations the with the other retailers we've we've pulled back a little bit some doing traditional black friday promotion just knowing that this year most of the sales are likely and gonna come digitally so i just want to point out and kiss anybody's looking at the black friday circular the nazis and machine heavily promoted that that was the reason why so
spk_0: with that being said i want to make sure we have tons of question so well we'll turn turned over to you guys at this time if you like to ask a question of please press the star and one i your touchstone so you may remove yourself from the queue at any time pressing the pound key once again that a star and to ask the question will pause for a moment to allow questions to kill
spk_15: we will take our first question from eric nickerson with sm the yeah your line is now up and
spk_16: i i guess i'm not from yes and dm
spk_17: as you know
spk_15: that the morning and
spk_18: yeah a basic bernardo said a moment ago
spk_15: shut down we are what are you to the moment ago that we're shipping be much show you everything it's it's coming in from the factories
spk_11: so what are you are you have and using the air freight to she everybody supplied yeah know we we are you of as for the most part or products to do not make sense for every way because of the kids i said i'm in indiana with you don't work with with huge margins are busy but on
spk_13: fortunately it's is use them you know we did have some inventory that we carried over from last year
spk_11: without the we were able to use for fulfillment ah we did go a little aggressive on on on order on in this year and we also have plotted common in in november week three week for in december which usually we don't do
spk_13: the in those are all due to demands on that we received are beyond the we had to go back to pull some traders so i'm no lonely afraid but i'm
spk_11: the we tried our best to to to catch up as as much as possible is in some cases that the man has just
spk_15: fog or exceeded what were we than expected get spirit that kills you margin to see the were afraid i know i'm
spk_11: everything has to do you set it down because of it pandemic
spk_19: overseas sales and didn't in a little slow bad about the a you're talking about europe and to mostly england is it
spk_11: the their act together selected and also in i'm in a great britain we will also have a major customers your own of this year cause much toys which drove a lot of the a lot of the sales you know they decided to go directly with a factory and that was the just offering prices that that we just could not compete when it came to
spk_15: going to a distributor and and they decided to to pass on the doesn't screw this year so that that concert but but also yeah i mean you know a combination of the pandemic a combination of a bomb amazon flooding the product know that the market with those are chinese microphones on don't things have contributed in and i think are are distributed or just to sort of to be approach that you know if you could a big ones are on the disease than than just passed on the business i get the i what i want to ask about our like if i recall read such a business here
spk_11: last spring picked up because of it pandemic is people were home looking for things to bite entertain themselves serves over a year if there was more a situation situational the just didn't didn't occur that might have had to him he hadn't had that is extra competition that command as yeah yeah exactly
spk_13: yes yes as as the big dumb or or the customers are is a uk distributor
spk_15: and and his his numbers room for know this year and and mostly was because you know you get that a block and video that walking away from from the smith the zoo said i was just not gonna be possible to them to do because they big they were directly to factors okay had a swimmer and and
spk_20: after speaking with brendan that a while back about sir
spk_15: about the mike and if i remember right he said that them that we do have them a extra feature in there that next and like better as as others makes don't have enough why we get away with charging higher prices and and it's also pay each as i have that information for act i'm wondering am is as still it's a stewie still have the only makes it does this particular thing that nobody else does
spk_21: and then i was looking for read through this that situation cheese or out the other contenders you got it
spk_11: were the same features so that we won't have that advantage and for
spk_22: was easier
spk_11: there's there's two things i'm a number one we we we have a licensing deal with with cbs for the carpool karaoke official branded mike i'm is so a lot of consumers know know that know be a know the show know james corden i do feel that would be by this mike is the official or show mikes so that does does dutch in a competitive advantage of we have a the other thing is that the mike works with your car radio city you can see in the car and and in dutch been a feature that the it's not proprietary by
spk_15: that has the unique to this product on we have heard in in asia is that that the our competitors coming after that technology so what we're going to do is for year number two were going to add some additional features
spk_23: including voice voice aside some minor design changes but still we have we have the exclusive deal for the carpool karaoke licensing
spk_15: and where would i be correct to assume that that assesses is patentable it's just something we discuss stay ahead of the ahead of the game and try to stay has a game is is added
spk_0: yes correct okay
spk_24: yeah we're a quarter guys i think get our questions or here
spk_25: if you again if you heard the question please press start and want are your touchstone song for next question from jonathan alvarado
spk_11: i know what it
spk_26: as if any supply synesthesia
spk_11: able to see iron man inventory one oh no not this doesn't have been supply chain issues or there's delays coming out of i'm and out of china
spk_27: does a lot of issues due to the pandemic
spk_11: there's a there's a lot of delays at the point and sometimes we have we have good job though that are scheduled to be picked up let's see today eight o'clock in the morning and on the can get him out the posed to them we have to wait three days which means we have to change orders for the following week but the one thing i would tell you is that retailers surprisingly have been amazing they have worked with everyone this year too i'm in order to to change orders without penalties i'm walmart just announced that there are not going to issue a charge backs from november week to your the way to christmas on you because everyone is in the same boat as you want seven charges would deployed you know we recently had of that's what i got the the gotta devoted to our tacoma that the league goes by two weeks so everybody's were in a week we've been sending out of we said data a memo about a month ago to other retailers and the response to as was it a when we were on on the same boat
spk_3: so somebody to scrambling than any other there has been some issues
spk_28: but i could have to a report that retailers have been extremely flexible with us
spk_4: and with all vendors and they have worked on changing borders it that it there's dollars
spk_29: yeah and seriously i suspect that the white house like last of guy
spk_30: and according to us
spk_6: director of the party is catching up at some substantial issues
spk_4: catching up as our
spk_31: attacks are coming
spk_2: well off substitute
spk_11: supposed to be at this point
spk_14: it's coming and based on
spk_11: is there any drop off in carpool karaoke sales are they said no this study the study i'm just last week of we saw twenty five hundred pieces that amazon were you know used to be in the fifties and and less than the hundred so yeah know that the dirt dirt the study everybody's seen nicer numbers we we just bought him some additional inventory that we saw reason to have only two february and were so about again so
spk_32: and this is significant numbers that is that is that it's like number so yeah what was once she received a third the numbers are study
spk_33: what we're hoping it's for twenty twenty one to move a lot of the online success and continue that and bring back into brick and mortar because someone some of the brick and mortar on location amina a policeman was lost
spk_11: so now most of it is as sites which is fine but we're looking to on to to get on my success and twenty twenty one and virgin mega bucks for the most i are there any new products
spk_14: and the works
spk_11: we have yeah we we who does he have some new products in the works are you know what we we are we are trying to capitalize on the why five product that was a success and we're we're designing the
spk_13: a line of that i'm graveyard
spk_0: yeah we're we're working on a particular incident to teaser yeah we we should have i'm a nice assortment of products
spk_34: to be launched for summer or fall of twenty twenty one
spk_0: thanks
spk_35: and once again if you like to ask a question please press the start and one on your touchstone phone next question zachary call you're not a so often
spk_36: we cannot hear you
spk_11: new function on your phone your line is now up for your question thank you how are you everyone great are earnings and pleasure the here are you my one question the going to be on how much do you think you know at home as a covert sell you know you know they helped his quarter the look at it as and of not not being affected you to get help you immensely or going forward and ago or basis you know how to look at that the think it's no definitely helping you a lot or is a kind of stagnant or the doesn't at that my question yeah that's a good question you know we we have seen the demand increase since covert you know we eat since since about march or we start to see him some really good numbers in those numbers were good for spring summer
spk_13: and now we're not are getting to the holiday season you know we're seeing all on a regular honestly post but this does a cop a dozen there's also some and a different effect or the above beyond beyond it on that during the that cycle that go to episode and saw that we go to the early so off
spk_11: then with it was within the music departments are like musical instruments have a steady way that go up and down and every few years you start seen a spike
spk_37: i'm a we are seen a spike in musical instruments a
spk_38: that usually means a residual effect into karaoke which means that you know parents are promoting maybe not as much video games but are you know just
spk_0: you know learning instruments and they say god
spk_39: a soda so that guy i believe the combination of both but the epidemic has definitely helped out the dimaggio in the united states yes got it thank you and we will take our next question jason hersman now open
spk_11: i agree color skies and ah i'm sorry i guess the yeah first few minutes of the call so i thought i said she covered this already i was hoping can give a little bit more detail on some of the maybe some relationships that your health with building and in some of the market to doing arctic toxic is so effective
spk_14: what you would you're doing to serve capitalized on on somebody she had is great promoters or to really dug out your brand and and sustain couple to a karaoke bike in some other aspects of your business
spk_13: yeah that's that's a good question i'm you know and and and line or has shown it and on some of the the the numbers that marketing has gone down and we we we've we've done a total shit shit on on on a marketing expenses and it it was because any have any of us are geniuses or anything i mean it was just a budgetary reasons that we're trying to cut expenses and out of that you know what was born was
spk_14: you know really to influence around take talk
spk_11: indian be charged on on on the with you know the on the carpool karaoke mania in and things like that so now we've you know we we have a german by chris to check a who runs you know lot of a marketing and product
spk_2: his team as which we start to arm
spk_11: to a lot of the influencers on take talk in a lot in to be receptive and in it's not expensive i mean we've also looked at a to service call a fortune which is you could go higher recent grad reason marketing grad and obtained or services for a smaller size two hundred two hundred and fifty dollars on and for that they'll give us polls you know go go go go go on him and make sure that that the
spk_25: that the to users are engaged in not enough pieces and you know we see
spk_39: i talk page grown substantially michigan gauge me on instagram on c spoken on take charge
spk_11: increased and and it's been for a fraction of the cause you know martin sauce now that we see this model work on once we you know what's your cash and pools and and of our sales improve where we can reinvest in that i think we'll we'll we'll reach out are on a on a larger scale right now we have just some tea influences that we're working with on to help us out and it's it's worked out for us bernardo let me just one follow up are you seeing this is mostly i can trick talking or or influencers that the most a us based are you so it was reaching out to some in in other markets whether it's ah uk or or wherever to try and awful build some has international
spk_13: i guess treasures or infrared you know your to be as it's a good cause you know right now it is mostly you ask are you know in australia we have worked out with our with our with our streaming distributor there
spk_11: a to to do some influence they did they have a good presence on on instagram as well but you know if it hasn't it hasn't been the same
spk_39: but i see what was once we received true true hear what's working to you as you know them there was talk was struggling she now on to see the is the have similar programs in the uk
spk_0: and in in copenhagen and and some of the other regions are we doing really well but all all
spk_40: are you sure distributed is mostly team is also has been in the past very savvy was wisdom with influencers and and things like that so
spk_15: unfortunately we have seen most of the success here in the us but i'm a but i'm sure that that we could used as a model international them some great thank you very much appreciate the answer and we'll take our final question from eric
spk_4: elias often yeah i did fickle and anger and finance question i remember a guy said you check gotta out of pee around aspirin
spk_3: i find some right about that the it's funnier how much was it and and her and has it been forgiven then taken in income here
spk_4: the answer that is still on a boxer was haunted and forty five thousand dollars
spk_41: have we have we it in the way that we're supposed to be spent and we expected to be forgiven the banks have to submit up or expenses and are talking to a
spk_42: the government keep on changing the rules in terms of how they want to report how they want to report and smaller right now companies like ours are took less than a million dollars is should be pretty simple thing to submit the things i have and just get forgiveness
spk_15: there's senate delay i don't know why off and die in fact i asked a question this morning echoes it up to the fact that have to stop everything and i said that patients
spk_43: keep changing our supposed to do it ah but he added the expectation is that it won't forgive and and it's not been taken off the books yet so i'm expecting that to be to pick up before the end of this fiscal year
spk_3: if you notice the government becomes when program
spk_44: exactly
spk_42: i have
spk_15: i understand they're looking for fraud around around the country is what made you a slowing down so anyway it's not it's discussion about cheaper hasn't had any earning income that effect yet it would be next year then sometimes that gets five and then am i right well since our fiscal year streets
spk_45: thirty one
spk_15: i'm mean i'm hopeful that by three thirty one thing is is taken care of option so that we could report disclosure much to get off
spk_0: clean them up on the ballot
spk_2: before the disclosure for i would be phased out of your taxable income and right when it's when it's forgiven if it's hard to get it
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