Jumia Technologies AG Q2 FY2023 Earnings Call

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Jumia's Results Conference Call for the Second Quarter of 2023. At this time, all participants are in a listen-only mode. And after management's prepared remarks, there will be a question-and-answer session. I would now like to turn the call over to Safae Damir, Head of Investor Relations for Jumia. Please go ahead.

Thank you. Good morning, everyone. Thank you for joining us today for our second quarter 2023 earnings call. With us today are Francis Dufay, CEO of Jumia; and Antoine Maillet-Mezeray, Executive Vice President, Finance and Operations. We will start by covering the Safe Harbor. We would like to remind you that our discussions today will include forward-looking statements. Actual results may differ materially from those indicated in the forward-looking statements. Moreover, these forward-looking statements may speak only to our expectations as of today. We undertake no obligation to publicly update or revise these statements. For a discussion of some of the risk factors that could cause actual results to differ from the forward-looking statements expressed today, please see the risk factors section of our annual report on Form 20-F as published on May 16, 2023, as well as our other submissions with the SEC. In addition, on this call, we will refer to certain financial measures not reported in accordance with IFRS. You can find reconciliations of these non-IFRS financial measures to the corresponding IFRS financial measures in our earnings press release, which is available on our Investor Relations website. With that, I'll hand over to Francis.

Thank you, Safae. Welcome everyone. Thanks for joining us today. I am pleased to report another quarter of significant reduction in losses as we execute on our strategy with discipline and focus. Q2 '23 was the fourth consecutive quarter of loss reduction on a year-over-year basis, with a material acceleration in the base of loss reduction. In Q2 '23, we cut both adjusted EBITDA and operating losses by two-thirds, reaching the lowest levels in over four years. This was achieved thanks to significant savings across the full cost structure. We cut our operating expenses by almost half in Q2 '23 compared to Q2 '22. We are reaching record levels of efficiency, particularly in fulfillment and sales and advertising expenses, while improving our customer value proposition. And that's a very important point. We are not driving cost savings at the expense of our standards of operation. We are operating more efficiently with a leaner cost structure, while improving the quality of our supply, expanding our logistics reach and providing our customers and sellers with a better value proposition overall. Having successfully right-sized our cost base, our top priority is now growth. And here, we are taking no shortcuts to drive growth. We are doing the heavy lifting and fundamentals to build what we believe to be a sustainable foundation for long-term profitable growth at Jumia. We are now in the middle of this transition with the added complexity of a very challenging macro environment, which is heavily affecting usage performance. Let's now review the details of usage in Q2 '23. Quarterly active consumers, orders and GMV declined by 28%, 37% and 25% year-over-year, respectively. This was driven by a combination of factors. First, as already mentioned, the macro environment remains extremely challenging. The average inflation level across our footprint reached 14.1% in June '23 with highs of 42.5% and 35.7% in Ghana and Egypt, respectively. In Nigeria, our largest market, inflation reached an 18-year high in June at 22.8%. This is affecting consumer spending power and overall sentiments. And it's also restricting sellers' ability to source goods since there continue to be very severe restrictions on imports in many countries. The second driver of usage performance is internal. We continue to recalibrate our product and service portfolio, moving away from the most unprofitable categories with limited consumer lifetime value. This is currently impacting growth, but is the right thing to do to set the business on what we believe to be a solid foundation for growth. The most heavily affected categories were grocery and JumiaPay app services. We have now suspended our first party grocery offering in most countries, and we have de-emphasized the most promotional intensive services on the JumiaPay app. JumiaPay app services, combined with the FMCG category, which includes grocery products, accounted for 45% of the volume decline this quarter and 31% of the GMV decrease. In contrast, we are very encouraged by the early signs of growth in some of the priority categories, such as appliances, where our efforts to rebuild supply are starting to pay off. The third driver of usage performance specific to GMV is foreign exchange. FX was a significant headwind and contributed 13 to 14 points to the 25% GMV decrease in Q2 '23. Nine out of 10 local currencies depreciated against the dollar in H1 '23 compared to the same period last year. With respect to the Nigerian Naira, the effects of the liberalization of the FX regime mid-June led the Naira to drop by over 60% against the U.S. dollar in June. Clearly, there are lots of moving pieces on the usage front, which are adversely affecting our performance. However, we remain confident that we have the right strategy to drive long-term profitable growth for our business. I will not spend too much time on the details of our growth strategy. We have gone through that at length in our prior earnings call. I will briefly remind you of the key levers anyway. One, supply. We are focused on improving the quality and depth of supply on our platform, focusing on the core categories; and these are phones, electronics, home and living, along with fashion and beauty. Two, we are working on penetrating our addressable markets more effectively, and this means tapping into the large consumer pools located outside of the main cities, which are usually underserved by retail. We are currently doing a lot of work on the logistics and marketing fronts to penetrate these areas in a cost effective manner. Third, we're enhancing our UI and UX to make our platform easier and more intuitive to use. And last but not least, JumiaPay is a key enabler for e-commerce growth to add more convenience and remove frictions for consumers at the checkout. A good example of that is JumiaPay on-delivery, which we are rolling out in a number of countries to further reduce the use of cash. So, these are very structural improvements on our platform, not hacks to drive quick growth. So, we expect these efforts to pay out over time. That said, we are encouraged to see early signs of success in our efforts to rebuild supply in our priority categories. Then, looking at the GMV mix evolution over the past year, we clearly see an uptick in the share of phones, electronics, and home and living, which we call general merchandise categories. They went from 52% of GMV in Q2 '22 to 59% of GMV in Q2 '23. You might recall that between 2020 and 2022, the prior management team was heavily focused on expanding everyday categories, in particular, the FMCG and grocery categories. And this proved to be complex operationally with very challenging economics. Unfortunately, the everyday categories drive came to a large extent at the expense of the general merchandise categories, which were historically the bread and butter of our platform. It was therefore essential for us to build or rebuild these categories and strengthen our position in there. We are very pleased to see growing momentum in these categories again. For example, in Senegal, the electronics category was the fastest growing category in GMV terms in Q2, up 58% year-over-year followed by home and living, up 39% year-over-year. Similarly in Ghana, phones were the fastest growing category, up 25% year-over-year followed by home and living, up 15% year-over-year. The increased share in general merchandise categories is driving an increase in average order value, which was up 18%, reaching $31 in Q2 '23. This is an important aspect of unit economics. Smaller baskets are much more challenging economically and require very large scale and operating leverage on costs to breakeven. We are confident that our commercial strategy, along with our successful cost-cutting efforts, will help us accelerate our path to profitability. And this is clearly reflected already in the acceleration of loss reduction. Let's now move on to JumiaPay. I would like to start here by reiterating that the development of JumiaPay remains a priority for us, and we have outlined several ongoing initiatives to support this development, both on and off platform. On platform, we are focused on making JumiaPay an even more effective enabler of e-commerce. First, we are integrating more relevant payment methods. To complete the payments using JumiaPay for the first time, customers link their JumiaPay accounts to the underlying payment methods of their choice. And this can be debit or credit card or bank account or third-party e-wallets. We are in the process of extending the range of payment methods that can be linked to JumiaPay account to support JumiaPay adoption. Second, we are rolling out JumiaPay on-delivery. This new feature allows customers to pay digitally upon delivery of their order through a payment link or QR code, thus reducing the need for cash. After a successful initial pilot in Kenya and Nigeria in Q1, we are now deploying JumiaPay on-delivery in Morocco, Ghana, and Uganda. While we are in the early days of the product rollouts, the initial results are encouraging. In Kenya, a third of post-paid transactions in Q2 '23 were completed using JumiaPay, compared to 20% in March '23. Third, we are developing Buy Now Pay Later solutions in partnership with third-party partners to support purchases on our platform. Through JumiaPay, our customers can access consumer finance options offered by third-party partners, who are responsible for credit underwriting and loan disbursements. And last but not least, we intend to be very disciplined in terms of initiatives that we pursue. We are focusing on what brings tangible value to our ecosystem while supporting our path to profitability. For instance, we have been rationalizing the digital services offered on the JumiaPay app to focus on the ones that drive healthy repeat purchase behavior, while offering attractive economics. As part of that, we have suspended a number of services that were historically promotional-intensive such as airtime recharge services, vouchers, and many more. This has negatively impacted JumiaPay performance in the first half of '23, and we expect it to continue affecting JumiaPay performance for the rest of the year. Off platform, we believe that JumiaPay has strong development potential to process payments on behalf of third-party merchants. Here again, we plan to drive off platform development in a disciplined manner, starting in the countries where we already have obtained the relevant licenses to do so, Nigeria and Egypt. A number of improvements to our own platform solutions are transferable to off platform, including the Buy Now Pay Later solutions. We are also developing specific products and features to support our off platform development. For instance, we are developing a white-label checkout solution for third-party merchants, allowing them to offer payments under their own brand name on their platforms. Let's now review the performance of JumiaPay in Q2 '23 in more detail. In line with our objective of making JumiaPay an even more effective e-commerce enabler, we are significantly increasing the penetration of JumiaPay in both our physical goods and food delivery platforms. Let's start with TPV. TPV was $56.9 million, down 23% year-over-year and down 6% on a constant currency basis. FX was again a significant headwind to TPV performance, in particular the 76% depreciation of the Egyptian pound versus the dollar. The decline in JumiaPay app TPV accounted for almost 90% of the total TPV decline. This was a result of our decision to move away from highly promotional digital services on the app that drive limited consumer lifetime value. This is in line with the discipline imperative that I outlined earlier as well as our focus on profitable growth. On a sequential basis, TPV was up 12%, supported by the strong growth of JumiaPay on-delivery. TPV penetration as a percentage of GMV increased from 27.4% in Q2 '22 to 28.1% in the Q2 '23, supported by increased TPV penetration in both physical goods and food delivery platforms. In physical goods, TPV penetration increased from 21.8% in Q2 '22 to 26.3% in Q2 '23. In food delivery, the increase was even more significant, from 24.8% to 32.3% over the same period. Now moving on to JumiaPay transactions. JumiaPay transactions reached 2.1 million in Q2 '23, down 38% year-over-year. Here again, the decline is largely attributable to JumiaPay app, which accounted for over 90% of the overall JumiaPay transactions decline. Transactions penetration as a percentage of orders on both our physical goods and food delivery platforms increased significantly. Physical goods transactions penetration increased from 19.3% in Q2 '22 to 26.1% in Q2 '23, and from 23.2% to 32.1% in food delivery over the same period. Overall, 32% of orders placed on the Jumia platform in Q2 '23 were completed using JumiaPay compared to 32.7% in the second quarter of '22. The slight decline in overall penetration is due to the reduction of JumiaPay app services in the transaction mix. To wrap up on JumiaPay, despite mix effects impacting headline performance, we are making good progress on penetration. We are strengthening the quality and relevance of our products to better serve e-commerce merchants both on and off platform. I will now hand over to Antoine, who will walk you through our financials.

Thank you, Francis. Hello everyone. Let's start with a review of our top-line performance on Page 12. Revenue reached $48.5 million in Q2 '23, down 15% year-on-year and up 6% on a constant currency basis. First Party revenue was $21.9 million, down 12% year-over-year, but up 19% on a constant currency basis. FX was a significant headwind to First Party revenue performance, in particular the Egyptian Pound depreciation year-over-year. On a constant currency basis, we saw a strong growth in First Party revenue in Egypt, due to strong momentum in First Party general merchandise sales. We always aim to get the right supply for our customers, and therefore, may do retail business in an opportunistic manner to bridge temporarily any assortment gaps on our platform. Let's now unpack the performance of our Marketplace revenue. Marketplace revenue reached $26.1 million, down 15% year-over-year and stable on a constant currency basis. Commissions revenue was up 7% year-over-year and 24% on a constant currency basis. This was mostly due to commission take rate increases implemented in mid-2022. Marketing and advertising revenue was down 18% year-over-year, but up 5% on a constant currency basis. The challenging macro context is causing advertisers to be more cautious with their ad spends. Value-added services revenue, which mainly includes logistics revenue from sellers, and fulfillment revenue, which includes shipping fees from consumers, decreased by 36% and 23% year-over-year in parallel with decline in volumes. That said, we are significantly improving the monetization of our logistics services and the pass-through of our fulfillment costs. The ratio of the sum of fulfillment and value-added services revenue over fulfillment expense increased from 56% in Q2 '22 to a record high of 80% in Q2 '23. This supports our unit economics and helps reduce our losses. Gross profit reached $26 million in Q2 '23, down 13% year-over-year and up 2% on a constant currency basis. Commission take rate increases drove an expansion in gross profit margin, which went from 11% in Q2 '22 to 12.9% in Q2 '23. Let's now move to cost, where we have been making very significant progress. Fulfillment expense reached $13.7 million, down 50% year-on-year and 42% on a constant currency basis, in parallel with the decline in orders. Importantly, we are reaching record levels of logistics efficiency. Fulfillment expense per order excluding JumiaPay app orders, which do include logistics costs, decreased by 30% from $3.2 dollars in Q2 '22 to $2.2 in Q2 '23. As a percentage of GMV, fulfillment expense improved from 10.2% to 6.8%. This is a very important transformation of logistics economics and reflects the success of the initiatives we have been working on across our logistics chain. These include a higher share of pick-up station deliveries, which increased from 33% of shipped physical goods orders in Q2 '22 to 42% in Q2 '23. We are strategically expanding our pick-up station network to penetrate untapped areas of the market in a cost-effective manner. We have also been optimizing our footprint and logistics routes, improving warehousing staff productivity, reducing packaging costs, along with many other initiatives. Sales and advertising expense reached $5.8 million, down 74% year-on-year and 71% on a constant currency basis, as we continue to bring more discipline to our marketing investments. We see clear improvement in our marketing efficiency ratio with sales and advertising expense per order decreasing by 59% from $2.2 in Q2 '22 to $0.9 in Q2 '23. As a percentage of GMV, sales and advertising expense reached 2.9% in Q2 '23, which is more than a 5-point improvement year-on-year. I want to stress here that while we are reducing our marketing budgets, we remain committed to driving the profitable long-term growth of Jumia. We believe that the primary driver to unlock demand at this stage is not marketing spend, but rather a fundamental enhancement of selection, price, and convenience. Our priority today is on improving these fundamentals with a particular focus on capturing deeper and higher quality supply. Moving on to technology and G&A costs. Tech and content expense reached $11.1 million, down 22% year-over-year and down 21% on a constant currency basis. While this is a meaningful reduction, we have room to drive further savings as we continue rationalizing our software cost and staff structure. As part of that, we intend to locate an increased share of our developers and tech personnel in Africa, closer to our customers and sellers. Technology is a core part of our DNA and we remain committed to developing better products and features to improve the experience of all participants on our platform. G&A expense, excluding share-based compensation, reached $17.7 million in Q2 '23, down 33% year-over-year and down 20% on a constant currency basis. G&A expense included a $4.1 million beneficial impact from a tax provision release. Excluding the impact of this provision release and share-based compensation, G&A was $21.8 million in Q2 '23. The staff cost component of G&A, excluding share-based compensation, decreased by 32% year-over-year due to the organizational changes we have been undertaking. In less than a year, we have completed a major overhaul of our organization. We have removed significant layers of managerial complexity and largely reduced our presence in Dubai in favor of Africa. Importantly, thanks to a deep understanding of our operations, we drove major staff cost savings without affecting our ability to serve our customers and sellers. I want to acknowledge here the hard work and resilience of our teams who have made this possible. Moving on to balance sheet and cash flow items. CapEx in Q2 '23 was $0.3 million as we remain committed to an asset-light model. The expansion of our logistics and pick-up station network that we referred to earlier is all done leveraging third-party partners, allowing us to scale faster and in a CapEx-light manner. Net change in working capital had a cash flow impact of $2.2 million, supported by a $2.4 million increase in payables related to the Jumia Anniversary campaign. Cash utilization for the quarter was $38 million. This included a $19 million adverse currency effect on cash, with $13 million related to the Nigerian devaluation in June '23. Notwithstanding FX headwind, cash utilization was down 42% year-over-year in Q2 '23. At the end of June 2023, we had a liquidity position of $166 million comprised of $61 million of cash and cash equivalents and $105.3 million of term deposits and other financial assets. Of this total liquidity position, nearly 70% is in USD, and therefore, not exposed to local currencies risk. We feel comfortable with our liquidity position, and our successful effort to reduce losses and cash utilization allows us to materially extend our cash runway. I now hand over to Francis, who will walk you through our guidance.

Thank you, Antoine. We have a clear objective of reducing losses and accelerating our path to profitability, and we are delivering strongly on that. Considering the good progress made on loss reduction in H1 '23, we are now updating our adjusted EBITDA loss guidance for the full year 2023. We expect adjusted EBITDA loss of $90 million to $100 million compared to the previously communicated range of $100 million to $120 million. This implies over 50% year-over-year reduction in adjusted EBITDA loss. We expect also our cost efficiency efforts to continue paying us in 2023. We are updating our sales and advertising expense guidance to reflect lower marketing spends. As I mentioned earlier, we are focused on enhancing business fundamentals to drive growth. We're directing our marketing spend towards the most relevant and cost-effective channels. As such, for the full year 2023, we expect sales and advertising expense of $20 million to $30 million versus the previously communicated range of $30 million to $40 million. This compares to $76 million in 2022. Last but not least, given the good progress made in H1 '23, we're also updating our G&A guidance. Excluding share-based compensation, we expect G&A expense of $85 million to $95 million versus $90 million to $105 million previously. This compares to $118 million in 2022, and is essentially a reflection of headcount reduction. We remain committed to driving the business towards profitability. We have made good progress on cost savings so far, executing very strongly despite a very challenging macroeconomic backdrop. We intend to maintain very strong discipline as we work on getting back to growth. As part of that, we will continue making fundamental enhancements to our platform. And this means, securing better supply and pricing while offering a more convenient experience to customers and sellers. We're confident that this approach will pay off in the medium term, and we can see encouraging signs already at country and category levels to support that. Overall, we remain very confident in the long-term growth potential of our markets and our ability to capture this opportunity in a profitable manner. With that, we're ready to take your questions.

Thank you. We will now proceed to the question-and-answer session. Our first question is from Luke Holbrook with Morgan Stanley. Your line is open.

Good afternoon. And just two questions from me. The first is just on the fact that orders were down 37% in Q2. That worsened from 28% in Q1. So, I'm just wondering if you can just comment on where the trends were heading during the quarter and perhaps where the exit rate was for order declines by the end of the quarter or maybe on post-quarter trends. And then the second one is, have you seen merchants pass on kind of the high commission rates that you're now charging them to consumers that maybe weakened perhaps the value proposition and demand from that side? Thank you very much.

Thank you, Luke. Let me address your questions. Regarding the order trends, there are several factors to consider separately. Much of this stems from our strategic decisions. We recognized that certain aspects of our business were not sustainable with profitable economics, which is why we've reduced categories that required extensive promotions or had unfavorable economics. For instance, JumiaPay app services and our groceries and FMCG segments account for 45% of the decline in items sold, serving as a good indicator of the decrease in orders. Thus, almost half of the drop is attributable to our intentional actions and unsustainable areas. The remainder of the decline is significantly influenced by the macroeconomic environment. We are currently experiencing one of the worst macroeconomic climates in emerging markets, particularly in Africa, with high inflation and strict economic policies. This situation is severely affecting both the supply we can procure and consumer purchasing power, driving the usage trends we are observing. Looking at the trends within the quarter, there was no significant variation between the months. However, in the post-quarter period, we are beginning to notice some positive signs in volume across several countries as we entered Q3. While I cannot provide extensive details yet, we've observed that certain countries began their transformations earlier and have now reached a more stable macro environment, which is a positive turning point. I'm referring to countries like Ivory Coast, Morocco, Senegal, Ghana, and Uganda, which are significant markets for us. These signs are encouraging, and I would be glad to provide more insights during our next earnings release in three months. Regarding your final question about merchants passing on higher commission rates to consumers, we have noticed some variation across categories. It largely depends on the specific market and category dynamics. In certain areas, the impact on consumer prices has been neutral, while in others, some of the increased commission costs have been transferred to consumers. We aimed to implement this thoughtfully, applying larger increases in categories where price competitiveness is less critical, and selection matters more. For example, in home and fashion categories, consumers prioritize choice and variety, allowing vendors to pass on a portion of the commission increase without causing a significant negative impact. We have still managed to stabilize volumes in those categories.

Perfect. Thank you very much.

I hope this answers the questions.

It does. Thanks.

Thank you, sir. Our next question is coming from Catherine O'Neill with Citi. Your line is live.

Great. Thanks very much. I've got a few questions actually. Firstly, I just wondered if you could provide a bit more detail on what you're doing with regard to the high quality and lower price supply that you're talking about as a key driver for the business or key focus at the moment and where in particular you're seeing those gaps either geographically or by category and just sort of how long that process might take. That's the first question. Second, I guess sort of linked to that is, when do you think we should start to see maybe a return to growth again in terms of the number of active customers? Then thirdly, on JumiaPay, where you were talking about some of the off-platform opportunities, I don't know if you're able to provide a bit more detail on how you think about the size of those opportunities and the sort of revenue streams or revenue models associated with those? And then finally, just on your cash balance, I just wanted to understand a bit more about whether there's any trapped cash and what the composition is?

Sorry, I didn't catch the last question, Cathy.

On your current cash balance or cash and equivalents, just a bit more detail on whether there's any trapped cash and just what the composition of that cash balance is and the accessibility of that.

Okay, let me address the first three questions, and Antoine can take the fourth. Regarding our plan to enhance supply and prices, which is essential for our growth, I'd like to provide some details. Your first sub-question was about gaps we face. We have gaps in many areas across various countries and categories. Previously, Jumia focused on stimulating demand through marketing and promotions. However, the primary challenge in our markets is supply. Demand exists everywhere, but it's poorly served. We need to accept that not everything can be purchased at any given time. For instance, if someone needs a fridge, there may only be one brand available, or if they want shoes, there might be limited colors and sizes. Consequently, our consumers in these markets face difficulties accessing supply. I firmly believe that to grow, we need to focus on supply rather than demand. We have traffic and demand, but what we need is better supply for our consumers. This strategy has proven effective in the past in certain countries. We previously invested heavily in marketing for categories where the assortment was inadequate and where competitors offered better prices, more brands, and wider selections. At this stage, no amount spent on marketing can compensate for a lack of selection, and this has been a widespread issue. While some countries performed better, such as Senegal and Ivory Coast, we faced challenges in others. Our response is to engage with market players who control the supply, including suppliers and merchants. Many exist in our markets, and we must persuade those with access to brands and the ability to import sufficient quantities to return to Jumia with their offerings and provide us with better prices than other distributors. This is a lengthy process that may involve rebuilding or starting relationships anew, and it often relies on personal connections in many of the markets where we operate. Historical context plays a significant role, both positive and negative. While this process takes time, we see positive trends emerging when relationships are reestablished and volumes increase. Regarding the timeframe for seeing results, it's difficult to provide an exact figure. Generally, it takes six to twelve months to fully turn around a country, to enhance supplier relationships, rebuild categories, invest in the right marketing for those categories, and regain customer loyalty. This establishes a positive cycle of increased sales and supply. Given that many of our countries have been undergoing this transformation for more than six or twelve months, we should be starting to see impacts at the country level. Indeed, we are observing an inflection in many countries, which is a positive sign, albeit not yet affecting the overall group trajectory. To your second question about when we will return to growth, I can't provide a precise timeline. We are heavily focused on this goal and have successfully managed cost reduction and cash conservation. Growth is our top priority right now, and while we are working hard towards it, pinpointing whether this will happen in one, two, or three quarters is challenging. As for off-platform revenues from JumiaPay, it is equally difficult to quantify the opportunity. Currently, we are negotiating and improving our product while selectively pursuing contracts with key partners to validate our concept, ensuring satisfied customers before expanding further. We are particularly focused on demonstrating added value and scalability in Nigeria and Egypt. Finally, Antoine will take your fourth question.

Yes. But can you please repeat the question? Because my line is not very good, and it wasn't clear to me.

Yes, no problem. I was just wondering if you could give a bit more detail on the current cash situation in terms of whether there's any trapped cash and what the composition of cash balance is?

Yes. So, you know that we're operating in 11 different jurisdictions, and they all have their own foreign exchange regulations. In some of them, it's very easy to repatriate cash; in some of them, it’s a bit more difficult to deal with because the regulation is a bit complex. What I can tell you is that as we speak, there are no countries where we have a material amount of cash from which we cannot repatriate. And we have already started to repatriate for more than a couple of countries. There is no, as you speak, cash trapped in any country where we would have cash that we are not going to use. And maybe an additional point, the recent evolution in Nigeria, which is probably a very good move in terms of macro, will help to restore our confidence in the foreign exchange market and makes it easier to repatriate cash from the country.

Great. Thank you.

Thank you, ladies and gentlemen. At this time, we have reached the end of our question-and-answer session, and this concludes today's conference. So, you may disconnect your lines at this time, and we thank you for your participation.