Corsair Gaming, Inc. Q4 FY2021 Earnings Call

Good afternoon, and welcome to Corsair Gaming's Fourth Quarter 2021 Earnings Conference Call. Please note that this call is being recorded, and by participating, you agree to this recording. At this point, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. Now, I would like to turn the call over to Mr. Ronald van Veen, Corsair's Vice President of Finance and Investor Relations. Thank you, sir, please begin.

Thank you. Good afternoon, everyone, and thank you for joining us for Corsair's financial results conference call for the fourth quarter ending December 31, 2021. On the call today, we have our CEO, Andy Paul; and CFO, Michael Potter. Before we begin, allow me to provide a disclaimer regarding forward-looking statements. This call including the Q&A portion of the call may include forward-looking statements related to the expected future results of our company and are therefore forward-looking statements. Our actual results may differ materially from our projections due to a number of risks and uncertainties. The risks and uncertainties that forward-looking statements are subject to are described in our earnings release and other SEC filings. Today's remarks will also include references to non-GAAP financial measures. Additional information, including reconciliation between non-GAAP financial information to the GAAP financial information is provided in the press release. I would also like to remind everyone that until our 10-Q is on file, the Q4 2021 numbers are preliminary. This conference call will be available for replay via webcast through Corsair's Investor Relations website at ir.corsair.com. Andy will begin with our fourth quarter business highlights, and a discussion on what we are seeing in the market and Michael will then take you through a review of the financials and outlook before we proceed to Q&A. With that, I'll now turn the call over to Andy.

Thank you, Ronald, and welcome to our Q4 2021 earnings call. We're pleased to report that for the fourth quarter, revenues were $510.6 million at the high end of our guidance, resulting in a record $1.9 billion for 2021, an 11.8% growth over 2020. Gross profit for the quarter came in at $121.8 million and a record $513.9 million for the year. We accomplished this as the world started to move towards a post-pandemic environment, and in the second half of '21, outside entertainment has mostly opened back up and shelter-at-home guidelines have generally been relaxed. Throughout 2021 and continuing today, we continue to be in a challenging supply chain environment. Based on feedback from our customers, we believe that the market for self-build gaming PCs continues to be constrained by the shortage of high-performance graphics cards. Michael will walk through more of our financial results in greater detail later in our call and address some of the questions we received at our Investor Day related to 2021 and short-term business conditions, which we weren't able to address at the time. It was our first-ever Investor Day as a public company, and we received quite a bit of positive feedback. If you've not yet had a chance to listen to the recording, I encourage you to do so. I'll now take a moment to recap some of the highlights of our Investor Day. We outlined three pillars of our growth strategy, which I'll quickly repeat now. Firstly, the gaming and creative market continues to grow quickly, and gaming hardware is growing much faster than gaming software revenue as consumers start to become more competitive and want to buy better PCs and peripherals. The creative market is exploding as video interaction becomes the norm. Secondly, we continue to take market share in most categories. This was highlighted by the fact that in the markets we track from external sources, we have number one market share in almost every category of components that we sell, which allows gamers to build high-performance gaming PCs. And we're in the top three in almost every peripheral category. Thirdly, we continue to enter new categories by both organic development and by acquisitions. In the last 18 months, we have entered three large new markets, microphones and cameras for content creators, and monitors for both gamers and content creators. We also showed our internal goals of reaching $3.5 billion of revenue by 2026. During 2021, we launched 141 new products and we've increased our number of product lines to 30. We have several examples of how new products and innovative marketing are helping us to grow our direct-to-consumer business. In November, we kicked off our CORSAIR COLLECTIONS product line with the Flavor Rush Series of our K65 RGB 60% mechanical gaming keyboard. This was a fun, colorful, custom and limited release providing unique and deeper personalization for our most engaged customers. The 60% keyboard has been quite a success in the market since we released it early last year, and the CORSAIR COLLECTIONS are exclusive to our Corsair web store in North America. In December, we introduced our long-awaited PlayStation 5 controllers, the SCUF Reflex Series, with price points ranging from $199 to $259. The Reflex, Reflex Pro, and Reflex FPS use our patented remappable paddles, and these adjustable controls give players the edge in most competitive games. The customer demand was simply incredible, and we saw our initial launch stocks sell out in minutes. The Reflex Series of controllers are currently available exclusively on our SCUF website. In our overall retail channel, we launched our new line of DDR5 memory products, as well as gaming systems using DDR5. DDR5 is the latest technology standard for DRAM, and we are currently shipping kits with speeds up to 6,400 megahertz. Both Intel and AMD are supporting this interface on the latest processors, which helps to dramatically improve system performance. Overall, demand has remained strong for gaming components and gaming peripherals. In fact, recent market data shows consumer demand for peripherals is close to the elevated 2020 work-from-home levels. As I mentioned before, the semiconductor shortages caused graphics cards to be in very short supply compared to demand, and has driven market pricing of certain graphics cards to 150% to 200% of normal MSRP. This has caused gaming enthusiasts to hold back on building new high-end gaming PCs that use our components. By our estimate, approximately 10% of the natural demand for our components and memory products in our Gaming Components segment was held back in 2021. We believe this should cause a bubble of pent-up demand, which will be released as GPUs return to normal MSRP in 2022. So in closing, after the extraordinary growth in 2020 caused by gamers spending more time at home gaming and the large growth in the creator economy, we are pleased to see that after lockdowns and shelter-at-home were lifted, our Q4 '21 network revenues were within about 8% of Q4 '20. Despite the ongoing logistical and supply chain challenges impacting markets, including the lack of availability of reasonably priced GPUs in the retail channel, we experienced healthy growth over 2020 in both our operating segments. Our Gaming and Creative Peripheral segment grew 20% year-over-year, demonstrating the underlying secular growth trends in the overall gaming, eSports, content creator, and streaming hardware and services market. We remain focused on expanding our presence in the market and are well-positioned to continue to gain market share. We remain pleased with our fiscal year '21 results and the positive momentum we have retained in the overall business in 2022, which provides us confidence in achieving our full-year and longer-term outlook. We have exciting growth potential and plenty of market share to capture. Thank you for your time and continued support. I'll now turn the call over to Michael to discuss our financial results for the quarter.

Thanks, Andy. And good afternoon, everyone. We have a lot of numbers to run through as we released both quarterly and annual results, so please bear with me. In Q4, we delivered net revenue of $510.6 million. Though a decrease of 8.2% compared to our record $556.3 million in Q4 2020, it remains well above Q4 2019 pre-pandemic level of $326.6 million. Net revenue for the year was $1.904 billion, an increase of 11.8% year-over-year. As Andy mentioned earlier, our fourth quarter results, and really the whole second half, remain challenged by a very difficult logistics and supply chain environment. Logistics remains slower than usual, with many shipping lanes taking over double the normal shipping times and at much higher costs. We estimate that the effect of increased supply chain costs continues to have a 2% to 3% headwind on our gross margin and resulting EBITDA percent during the fourth quarter. And we expect this to continue in the upcoming quarter. Ocean freight of 44 containers remains elevated compared to historical prices. But we did see some slight easing at the end of 2021 fourth quarter and expect somewhat better rates for 2022. Turning now to our segments. The Gamer and Creator Peripherals segment provided $176.9 million of net revenue during the fourth quarter impacted by supply and logistics constraints, a decrease of 7.8% from $191.8 million in Q4 2020, and well above Q4 2019 of $94.1 million. The Gamer and Creator Peripherals segment net revenue contributed 34.6% of total net revenue, an increase of 10 basis points from 34.5% in Q4 2020. For the year, the Gamer and Creator Peripherals segment net revenue was a record $647.2 million, an increase of 20% year-over-year. The Gaming Components and Systems segment provided $333.7 million of net revenue during the fourth quarter, a decrease of 8.4% from $364.5 million in Q4 2020, primarily driven by a shortage of reasonably priced GPUs and supply and logistics constraints, and well above Q4 2019 level of $232.5 million. Just over half of this revenue came from memory products, which contributed $176.8 million. For the year, net revenue was $1,256.9 million, an increase of 8.1% year-over-year. Gross profit in the fourth quarter decreased by 20.8% to $121.8 million from the record $153.8 million in Q4 2020 and is well above the Q4 2019 pre-pandemic level of $70.5 million. The decrease over Q4 2020 was primarily due to increased logistics costs, a return to more normal seasonal promotional activity, and reduced revenues. Gross profit margin was 23.9%, a decrease of 370 basis points from 27.6% in Q4 2020, mainly due to significant increases in logistics costs, especially ocean freight, and promotional activity. For the year, this was a record $513.9 million, an increase of 10.4%. The Gamer and Creator Peripherals segment gross profit was $52.8 million, a decrease of 23.3% from $68.9 million in Q4 2020, primarily driven by a decrease in revenue in the same periods, increased supply chain and logistics costs, and a return to more normal pre-pandemic level of holiday promotions. Gross profit margin was 29.9%, a decrease of 600 basis points from 35.9% in Q4, largely due to the previously mentioned supply chain and logistics costs and rebate levels. For the year, Gamer and Creator Peripherals segment gross profit was $224.9 million, an increase of 18.5% and a record 43.8% of total gross profit. This continues to be a great overall story and a formula for overall margin expansion as our fastest-growing and highest-margin segment also sits in our largest growth market. The Gaming Components and Systems segment gross profit was $69 million, a decrease of 18.8% from $84.9 million in Q4 2020, primarily driven by the decrease in revenue in the same periods and increased logistics costs. Gross profit margin was 20.7%, a decrease of 260 basis points from 23.3% in Q4 2020, primarily due to freight costs. Our memory products margin in this segment was 17.5% for the quarter. For the year, Gaming Components and Systems segment gross profit was $288.9 million, an increase of 4.8%. Fourth quarter SG&A expenses were $81.5 million, a modest increase of 0.5% compared to $81.1 million in Q4 2020 primarily driven by an increase in outbound freight costs due to increases in ocean and air freight, offset by a decrease in volumes due to lower revenue and an increase in personnel-related expenses. Fourth quarter product development expenses were $15.1 million, an increase of 9.9% compared to $13.8 million in Q4 2020, primarily driven by an increase in personnel-related expenses as we continue to focus on bringing an increasing number of products to the market. Operating income in the fourth quarter of 2021 was $25.1 million, a decrease of $33.8 million from $58.9 million in Q4 2020. For the year, this was $137.9 million, a decrease of $20.5 million from $158.4 million in 2020. Adjusted operating income in the fourth quarter of 2021 was $38.5 million, a decrease of $32.6 million from $71 million in Q4 2020. For the year, this was $194.5 million, a decrease of $10.3 million from $204.8 million in 2020. Fourth quarter net income was $24.7 million, or $0.25 per diluted share, as compared to net income of $43 million or $0.43 per diluted share in Q4 2020. For the year, net income was $101 million, or $1.01 per diluted share compared to $103.2 million or $1.14 per diluted share in 2020. Fourth quarter adjusted net income was $34.7 million or $0.35 per diluted share as compared to adjusted net income of $53 million or $0.53 per diluted share in Q4 2020. For the year, this was $144.9 million or $1.45 per diluted share compared to $145 million or $1.60 per diluted share in 2020. Adjusted EBITDA for Q4 2021 was $39.5 million, a decrease of $33 million compared to $72.5 million in Q4 2020, resulting in an adjusted EBITDA margin of 7.7%, a decrease of 530 basis points from 13% in Q4 2020. Adjusted EBITDA for the year was $199.2 million compared to $213 million in 2020. Turning now to our balance sheet. As we discussed in our Q3 earnings call, in order to mitigate logistics delays, we strategically put more inventory in our hubs closer to our markets. They certainly paid off as reflected by our sequential growth over Q3, but we did pay for much of this inventory last year and have not collected in all the sales, resulting in an increase in our net working capital and a relatively low AP balance compared to our inventory. As funds come in during Q1 '22, net working capital will return to more normal levels. During 2021, we paid off over $78 million in debt, refinanced our remaining long-term debt to more favorable terms in Q3, saving over $8 million in interest expense per year, and increased our revolver capacity to $100 million, which was unutilized at the end of the year. We ended the year with $248.8 million in debt at face value and $62.4 million of unrestricted cash and a net leverage ratio below 1. We continue to look for strategic opportunities to use the cash we generate, such as our recent investment in iDisplay. Following such opportunities, we look to continue to reduce our debt. The last two years marked our transformation from a relatively leveraged LBO to a comfortably leveraged growth company. We are comfortable with our current debt levels and will value growth investments over debt reduction. But we do expect to continue to reduce debt. Turning now to our outlook for the year. For 2022, we expect total revenue in the range of $1.9 billion to $2.1 billion, representing growth of approximately 0% to 10%. Adjusted operating income in the range of $195 million to $215 million and adjusted EBITDA in the range of $205 million to $225 million. For 2022, we are expecting an approximately 45%-55% revenue split for the first half and second half. We expect supplies of reasonably priced GPUs to be more available as the year progresses, thus unlocking the pent-up demand Andy discussed earlier. Because of the timing of the holiday period in 2021 and Lunar New Year in 2022, we expect greater than average seasonal effect on Q1 revenue. The additional modeling details underlying our outlook remain largely the same as we have discussed in our prior earnings calls. For ease, I'll repeat them. We expect gross margins to remain pressured by logistics costs, especially in the first half of the year. Operating expenses will increase to support our higher revenue level and our continued investment in new products. Assuming no further debt pay down, we expect interest expense of approximately $1 million per quarter. The $4 million patent trial win in Q1 2021 is not in our outlook. This amount could vary depending on what the judge rules and is subject to appeal and the timing of recognition of a game, if any is uncertain at this time. An effective tax rate of approximately 21% to 23% for 2022 and a full-year average weighted diluted shares outstanding of approximately 100 million to 102 million shares. To summarize, we're pleased with our strong financial performance to conclude 2021 with fourth quarter revenue and profitability metrics achieving the high end of our expectations. We remain focused on growth following the transformation of our debt levels and cost management efficiencies over the past two years. As we begin 2022, we expect to continue to experience elevated freight costs and ongoing supply chain issues. But we currently believe these circumstances will ease as the year progresses. As these macroeconomic conditions improve, we expect to increase our cash position, which should allow us to execute on M&A opportunities that fulfill our investment criteria or further reduce debt. With that, we're now happy to open the call for questions. Operator, will you please open up the line for Q&A?

Our first question comes from Drew Crum with Stifel.

Andy, you mentioned launching some products tied to DDR5 during 4Q. Can you comment on how those have performed to date and what your expectations are for 2022? How material are these to your forecast? And then separately for Michael, the business experienced a little bit of gross margin slippage in '21 as you highlighted. And you mentioned some expected pressure in the first half. Just wanted to confirm that you're assuming gross margins for the year improved and whether or not you think '22 gross margin can get back to exceed where you were in 2020?

Okay. So the first question was about DDR5. In terms of expectations, I mean, we've sold out of everything that we built. So the way to think about this is, the semiconductor fabs that make memory chips will gradually move from DDR4 to DDR5. I think next year, maybe 20% to 25% of their capacity will move from DDR4 to DDR5 because the sort of people that are buying our components and the set of machines they're building tend to be higher end, the big ones of the latest performance, there's much higher demand. I think everybody, if they could spend a few more dollars will go to the DDR5 platform. And so yes, whatever we can get, we get probably an unshared fair of the supply because we have such a high market share now in consumer memory, but yes, everything we're getting was sold out. Now we're not assuming it's going to be a massive effect. It will help us a little bit because the ASPs are a little higher on DDR5 compared to DDR4 and it depends on the percentage. But we haven't remodeled that at the moment as a huge tailwind. And the reason for that is that the overall market for people building high-performance PCs is still somewhat limited by GPUs because they're so expensive and the difference in pricing GPUs between DDR5 and DDR4. So I think the big effect that we're going to have on that side of our business is in the second half of '22 as GPUs become more widely available. I hope that answers the question.

In terms of your question on gross margin, if you look at the ranges we gave for EBITDA, there is a slight improvement if you use a midpoint range year-over-year expected. So we do expect there to be some small improvements in gross margin year-over-year, and they're going to be weighted more towards the back half of the year.

Our next question comes from Mario Lu with Barclays.

Yes, the first one is a little bit more high level. In terms of the Analyst Day, you guys said a couple of weeks ago, you mentioned the long-term revenue goal of $3.5 billion by 2026. So yes, I think that implies close to a 15% CAGR growth starting in 2023. So just curious, if you could provide more color in terms of if that includes a breakout year needed to achieve that number or any drivers that are kind of embedded in that goal?

When comparing year-over-year, it's challenging to do so when one of the years included shelter-at-home conditions. During our Investor Day, we highlighted that from the second quarter of 2020 through the second quarter of 2021, those five quarters were primarily spent in shelter-at-home. This significantly impacted consumer spending and demand for consumer electronics, which is partly why the supply chain remains strained. It's important to note that the first half of 2021 was also under shelter-at-home conditions. Therefore, we don't expect the growth in 2022 to align with the compound annual growth rate you're referring to. We anticipate starting to see that in 2023 and beyond. The surge in gamer spending during the pandemic contributed to this growth, along with our increases in market share. There are optimistic indicators for the latter half of 2022 as well. Intel is expected to release graphics cards around the middle of the year, and we foresee that crypto mining might become less profitable or even untenable in 2022. These elements should lead to a significantly higher availability of graphics cards at more affordable prices. We expect that to create strong demand from consumers eager for reasonably priced graphics cards to resume their building projects starting from mid to late 2022 into 2023.

Great. That's helpful. Thanks, Andy. And then maybe a follow-up on gross margin improvement. Is there any updates in terms of the D2C strategy that you guys are implementing I believe it's up to 11% of revenue now versus 9% a year ago? I guess, how is that trending versus your expectations? And are there any other products kind of outside of Origin and SCUF that you're seeing a higher percentage to the D2C?

Yes. Well, I think now that we're well into the cycle of having a web store team and thinking strategically about the two things. One is as we release new products, we think about the web store strategy as we do it. So for example, we might launch, let's say, a microphone in the channel and then in our web store, we might launch a microphone plus a pop filter, for example. So we've got lots of ways of differentiating now. The second thing is that, yes, as you mentioned, with SCUF and ORIGIN, most of the M&A opportunities we're looking at that are smaller tend to be direct-to-consumer because these days, if you start a new company, it's so easy with Shopify to start your own web store that most people just go and do that. So both of those two things are going to continue to happen that will drive things up. Obviously, our base business of components in memory and keyboards and mice, we're not changing too much. So most of that business we expect to stay in the channel. The direct-to-consumer is clearly a higher-margin business, but it also has costs associated with it. And at the moment, we're not trying to aggressively drive customers from the channel to the store. We're more just trying to differentiate between some of the product offerings.

Our next question comes from Tim Nollen with Macquarie.

I would like to delve deeper into the seasonality aspect you mentioned in Q1. Looking back, it’s challenging for us to gauge the impact of seasonality since you went public during COVID. There has been significant growth, but now with the supply chain issues, I hope they will improve in the second half. It's somewhat difficult to determine how we should expect revenue and margins to progress throughout the four quarters of the year. Could you provide any additional insights on this?

Yes. So that's a difficult one because we don't want to start guiding quarterly. But I think what we can say is that, as you've heard from all the discussions just now, clearly, there's a lot more tailwinds going to happen in the second half of this year than the first half in terms of growth from previous periods because the first half of last year was shelter at home periods. And really, for the last 18 months, we've had chronic shortages and MSRP increases on graphics cards. So that really stops the building of gaming systems. So I think this year, like last year and the year before, is not going to be anything to do with historical seasonal norms. But I would say our internal expectations are that, firstly, we're more focused this year on comparing with 2020. In other words, 2019 and '20 pre-pandemic, that's what we're looking for now, is to try and gauge how the market is doing post-shelter-at-home, and the long-term effects are. And the answer to that is really good news. But as I said, we're not going to match the surge of when people stepped out of home with nothing else to do. Now everything, bars and restaurants are open and around here anywhere therefore. So that's the first part of it. But yes, I would say the message from here is that internally, we're assuming that there's going to be a much bigger headwind in the second half than the first because of graphics cards and also the easing of freight costs we expect. I'm surprised that hasn't happened already, but we expect that to start going down. Yes. Mike, is there anything to add on that?

We anticipate a distribution of approximately 45% in the first half and 55% in the second half overall. I've been in this role for just over two years, primarily during the pandemic, so I have yet to experience a typical quarter. I reviewed our historical data with my team since I frequently receive inquiries about normal seasonality. Generally, Q1 is slightly down compared to Q4 by less than 10%, followed by Q2, which sees a slight decrease as well, and then both Q3 and Q4 typically rise. If the Lunar New Year occurs earlier, it tends to have a more significant effect on Q1, while positively impacting Q2. However, I'm uncertain how this will play out given the current logistics environment; it may lead to a more substantial impact on Q1 than usual and a smaller impact on Q2 due to the holiday timing.

Okay. That's actually very helpful because I was trying to go back to prior quarters, and it was just hard to determine a pattern given the information we have, given what's happened in the last couple of years. Could I ask one other numbers question actually, please, which is about promotion rebate costs? You mentioned those going up. I guess I'm just curious how much is that related to product launches? How much is this just general cost inflation or choosing to market more? And what can we expect on that front in 2022?

I believe that in 2022, we should see a return to normal levels. During the surge that I mentioned, from April 2020 to July 2021, there was no need for promotions because everything was sold out. In April, when the shelter-at-home orders began, almost all of our retailers were completely out of stock right away. So, I anticipate that things will be more typical in comparison to what we experienced in 2019.

Our next question comes from Doug Creutz with Cowen.

It's been a bit over a year since you guys acquired Gamer Sensei, just wondering how that's proceeding, whether it's sort of going according to your expectations? And how maybe your experience has sort of affected your interest in other gamer service type acquisitions?

Yes. So we're actually still pretty bullish on the whole space around not just services, but sort of how we engage with the gaming community and how we interact with them. As we sort of get more engaged with our direct-to-consumer initiatives, this is certainly an important stepping stone. I'd say as we've gone through the year, there's been a few changes in terms of how gamers are expecting to do lessons and what's going on in the promotional environment and that sort of thing. So I think at the top level, we'd probably say still a work in process, still very bullish in the space. But a little different than we initially thought we went into it.

Our next question comes from Rod Hall with Goldman Sachs.

My first question comes back to the promotional activity, Andy, and the increase there. I'm just curious how close to normal we were in Q4? And when you think promotional activity would be back to whatever the new normal level is, does that take until the middle of the year, and what does that mean for, I guess, your gross margins in the first part of the year? And then I've got a follow-up to that.

Yes. No, I think Q4 was pretty much at normal levels. I'm thinking...

The reason why I talked about it and went through that section is because I was comparing to 2020 with the prior year where there was almost no promotional activity because that was in the heart of the shelter-at-home period. I think I've characterized the end of last year of '21 more like a normal promotional type of environment, sort of like in the prior years of '19, '18, and so on. So we didn't see anything wild and out of the ordinary, but certainly compared to the prior quarter, the year before, it was a lot more.

Okay. That's helpful. That leads to my second question. You mentioned gross margins increased in '22, which were 27% in '21. That suggests they could be at 28% in '22, but you just indicated 24% with typical promotional activity. It seems challenging to reach 28%. I'm wondering if you could explain how you might bridge back to that level or even exceed 27%.

The two main elements, Rod. The first is the easing of the logistics costs and the entanglement around there. So that will certainly give us a pretty big help. The second part of it is going to be just the continued shift to a higher percentage of our higher gross margin products. They have a higher growth rate. So over time, that shows us the total margins. So between the two of them, we're relatively confident we can increase margins. Obviously, it's difficult to overcome the very high margins at the end of '20 and at the very beginning of 2021, when promotional activity was quite low due to shelter-at-home. But longer term, we don't see a problem with getting the margins back up.

Yes, I’d like to add that we experienced some challenges in the past few months due to COVID. Some of our factories in Vietnam were temporarily closed, prompting us to rely on sources from China, which impacted tariffs. As a result, we incurred some unusual costs related to this situation, but that is largely behind us now. Looking ahead to next year, while we won’t be completely past COVID, its impact is expected to diminish. We also anticipate a decrease in freight costs. Additionally, I want to highlight that the most significant cost increase for PC gamers aiming to build their own systems is in graphics cards. This has been a recurring topic. The highest-end products we offer are typically sought after by those building PCs priced at $2,500 to $3,000. Consequently, the substantial increase of around $1,000 in the price of graphics cards is creating a bottleneck for these builds. Therefore, we are currently facing limitations with some of our high-end products, which usually provide the best margins. However, I believe this situation will improve over the course of the year.

Yes. Operator, are there any more questions? Operator? I'm not quite sure what happened for our operator there. Hopefully, everybody else can hear us. I'll wait another minute or two and see if he comes back on. If not, we may have to take questions after the call during our scheduled call time.

All right. Well, I think the operator has gone, well.

Oh, he is not. No, no, go ahead.

Yes. So look, thanks, everybody, for attending. We'll follow up with the analysts in our usual meetings, and we'll see you again next time.

Goodbye.