Earnings Call Transcript - NTES Q1 2022

Operator, Operator

Good day, and welcome to the NetEase First Quarter 2022 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Margaret Shi, IR Director of NetEase. Please go ahead, ma’am.

Margaret Shi, IR Director

Thank you, operator. Please note the discussion today will contain forward-looking statements relating to the future performance of the company and are intended to qualify for the Safe Harbor from liability as established by the US Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions, and other factors. Some of these risks are beyond the company’s control and could cause actual results to differ materially from those mentioned in today’s press release and in this discussion. A general discussion of the risk factors that could affect NetEase's business and financial results is included in certain filings of the company with the Securities and Exchange Commission, including its Annual Report on Form 20-F, and the announcement and filings on the website of the Hong Kong Stock Exchange. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today’s call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures as a reconciliation of GAAP to non-GAAP financial results, please see the 2022 first quarter earnings news release issued earlier today. As a reminder, this conference is being recorded. In addition, an investor presentation and a webcast replay of this conference call will be available on NetEase's corporate website at ir.netease.com. Joining us today on the call from NetEase senior management is Mr. William Ding, Chief Executive Officer; and Mr. Charles Yang, Chief Financial Officer, along with other members of the senior management. I will now turn the call over to Charles, who will read the prepared remarks on behalf of William.

Charles Yang, CFO

Thank you, Margaret, and thank you, everyone, for participating in today’s call. Before we begin, I would like to remind everyone that all percentages are based on RMB. We kicked off 2022 with a solid quarter, advancing each of our business lines, with total revenues coming in at RMB23.6 billion, up nearly 15% year-over-year, and our net operating profit increased 29% year-over-year to RMB5.5 billion. Online games revenues were RMB17.3 billion, growing by 15% year-over-year. Our flagship titles continue to impress with their remarkable longevity and strength. In the first quarter, revenue from Fantasy Westward Journey Online and new Westward Journey Online II continued to grow steadily, demonstrating NetEase's competence in operating franchise IPs over an impressive duration of about 20 years. With immersive festive activities and engaging new expansion packs during the Chinese New Year period, we are thrilled that these epic games remain as attractive and appealing to the players as ever. We are actively growing many other long-lasting franchises in addition to these legacy titles, keeping our content fresh with years of perseverance and dedicated craftsmanship. Take LifeAfter as an example; our open world doomsday survival game, first introduced in 2018, continues to lead its category with its distinctive survival gameplay. Since its operation more than three years ago, we've been frequently rolling out big updates for LifeAfter on almost a quarterly basis, refreshing players' appetite with numerous content updates. In the first quarter, the Spring Festival version of LifeAfter brought the game to the forefront once again on China's iOS top-grossing chart. In terms of newly launched titles, nearly one year since its launch, NARAKA: Bladepoint maintains strong engagement levels with fast-paced content updates, including new gameplay, heroes, and weapons. Adding to our regular update schedule, we are prepping for a significant update, including the first new map to bring new excitement to the whole player community in the second half of this year. Featuring unchained melee combat, Naraka: Bladepoint was a huge breakthrough for us in eSports and has become one of the most popular games on live streaming platforms in China. To round out the games ecosystem, we established a multi-tiered tournament system consisting of scrimmages, regional tournaments, and a world championship catering to different player groups, including the general public, as well as professional teams across different regions. In January, we concluded the first world championship tournament, the game's highest level of competition, which attracted considerable attention from eSports fans worldwide and brought global players an exciting visual feast. We are also seeing growing momentum with Infinite Lagrange; similar to our original SLG game, Invincible, this next-generation SLG title has begun to show a healthy sustainable growth trend in the first quarter. As the game advances, we are steadily gaining more confidence in our ability to extend the success of SLG games to an even broader demographic. In April, we launched Dead by Daylight Mobile in Asia, co-developed with Behavior and published by us. Dead by Daylight Mobile is the mobile version of the famous asymmetrical battle arena game, bringing players unrivaled asymmetrical competitive experiences on mobile platforms. Soon after its debut, Dead by Daylight Mobile topped the iOS download chart in both Japan and Thailand with very strong user engagement. In the second half of the year, we plan to bring to the world more exciting titles, which we hope will thrill our growing global community. In particular, we are extremely excited to have Diablo Immortal slated for release on the 2nd of June in most global markets. And last Friday, at our Annual Game Day event, we announced that the China launch of Diablo Immortal is confirmed for June 23rd. As one of the gamer community's most anticipated titles this year, Diablo Immortal marks one of the most ambitious game releases in the Diablo franchise's 25-year history, and will bring fans and new players an uncompromised AAA gaming experience. Pre-registration has been exceptional, with more than 35 million people preparing for the battles to come worldwide, including 15 million in China and counting. Diablo Immortal supports both cross-play and cross-progression, allowing global players to join the fight with each other regardless of platform while being able to seamlessly transition between mobile and PC gameplay. We consider the debut of Diablo Immortal a huge opportunity to show the world, particularly the western gamer community, our strong R&D capability. We take a very global view of our online game business, and Diablo Immortal truly embodies the worldwide appeal that we hope to possess. Next in the pipeline, we will be introducing Naraka: Bladepoint on console. The development is well on track, and we are definitely excited about its prospects and to welcome console players to our global Naraka: Bladepoint community. Equally exciting is our planned global market launch of Harry Potter: Magic Awakened, which captivated the Chinese market since last September. While we are putting great effort into the global vision, we are also simultaneously working intensively to update the game in China, regularly rolling out new cards, costumes, and gameplay to add even more fun. Our rich pipeline goes far beyond these titles, and we continue to initiate new projects on schedule. As usual, we held our 2022 annual game product launch event last Friday on May 20, revealing the latest information about other exciting titles in the pipeline, including the mobile versions of Justice and Naraka: Bladepoint, Eggy Party, a casual game, Raw of War, Vive le Football, and Mission Zero. We encourage you to read through our press release about this event or watch last Friday's event replay to get more comprehensive information. In 2022, we have made more solid progress in globalization. We have always been relentless in our drive to invest in and empower our people, and we are incredibly excited to have more global talent joining us. After years of strategic planning, we now have a number of first-party overseas studios across Japan and North America, each of them being led by top industry veterans who are using their creativity to forge their best titles on NetEase's platform. For example, our three Japanese studios aim to build great console games for both the Japanese and global audience. Earlier this month, we also launched our first US studio, Jackalope Games, led by industry veterans, Jack Emmert, who has decades of experience in MMO game development. Our idea is to persistently unleash talent potential by enabling them to focus on core mechanics and storylines with creative autonomy, while offering them solid technical support in areas such as coding and art design. Going forward, we hope the world will see more of NetEase's relevance on AAA releases in the global market, either through self-development, investment, or publishing. Now turning to our education business. NetEase Youdao achieved a solid and sustainable performance in the first quarter after disposing of its academic after-school tutoring businesses. With total net revenues of RMB 1.2 billion and a gross margin of 53.1%, smart learning devices remain the key driver of Youdao's future growth. In the first quarter, Youdao continued to extend its technology offering by launching improved content, features, and new products. Net revenues from Youdao's smart devices segment reached RMB 253 million, representing an increase of 25% year-over-year. Through partnerships with education practices in 11 additional regions, we have added original songs to the Youdao listening part based on various versions of the English learning textbooks. In early April, we introduced a new product named Youdao light, which integrates AI learning features into a desk lamp. Powered by our robust AI algorithms, it allows users to schedule a study plan, look up meanings and translations of words and sentences in Chinese and English during their study time, and review their homework after they finish studying. By clicking the screen to conduct research, the device helps students develop more independent learning habits and significantly improve their learning efficiency while protecting their eyes. Looking towards growth opportunities in the STEM Education sector, we have worked hard to optimize the functions and user experience for different courses. As a result, for example, gross billings from Youdao chess class increased over 170% quarter-over-quarter. In addition to content upgrades, we have also built a learning community on the Youdao board game academy app. On this platform, students of Go, Chess, and Chinese chess courses can interact and compete with AI or their peers of similar levels in a fun and engaging way. To complete the cycle of learning, testing, and grading, Youdao has pursued becoming an official online testing and certification site for various board game associations in China to make the skill certification process easier for our students. Looking ahead to the remainder of 2022, Youdao will remain focused on upgrading its diversified portfolio of products and services, and we have confidence in its future development powered by its sophisticated R&D capabilities and persistent drive to empower education with our technology. With NetEase Cloud Music, we maintained steady momentum in the first quarter. MAU for our online services was 182 million, largely stable both year-over-year and quarter-over-quarter. We also continue to improve our monetization capabilities, growing our net revenues by 39% year-over-year to RMB 2.1 billion, driven by healthy membership growth and robust social and payment services. Our membership paying ratio reached 20%, compared with 13% in the same period last year. We made enhancements to our content and introduced more product feature innovations to improve the user experience, which helps us drive paying user growth. Additionally, gross margins more than doubled quarter-over-quarter in the first quarter, reaching over 12% as we continue to optimize our content cost structure. On the new features front, we introduced our innovative Harry Potter Magic Radio, a joint collaboration with the NetEase Games team, which allows users and gamers to enjoy Harry Potter-themed podcast content within the game. While we continue to add unique products and capabilities that help redefine our community's music experience, we are also improving our brand awareness and influence with content-oriented and event-driven campaigns. We offer a full spectrum of varied content as the demands of our youthful user base are increasingly diverse and personalized. By the end of March 2022, our content library consists of more than 90 million music tracks, including music from established labels as well as independent artists. We are attracting independent music talent at a notable rate, and by the end of the first quarter, we had more than 450,000 registered independent artists on our platform. To help independent artists create and promote their music as well as realize commercial value, we continue to nurture music talent with invaluable tools such as support programs, traffic referrals, fan interactions, and multiple monetization methods. Moving on to Yanxuan. April marked its sixth-year anniversary. Over the course of the last six years, we have built Yanxuan into an exciting private label consumer lifestyle brand. We have established a strong supply chain system and can accurately profile user preferences with our leading algorithms. Through diversified channels, Yanxuan has launched a number of popular products such as cat food, bathroom fragrance, and ergonomic chairs. As we move ahead, Yanxuan will continue to focus on pets, home cleaning, bedding, and other categories that we excel in, while we continue to launch our regional design products and bring consumers products that facilitate a more pleasant lifestyle for children. Above all else, NetEase is always a content company with deep-rooted internet DNA. Our ability to innovate, create, and leverage our proprietary technology forms a cohesive layer across our different business lines, whether it be games, education, or music. Within each of these areas of robust content, we are steadfast in our mission, dedicated to improving our content competitiveness. We will continue to invest and innovate to provide users with excellent products and services through fun, technology, and surprises. At the forefront of each of our business lines is our commitment to social responsibility and charitable endeavors. With the recent pandemic cases in China, each of our businesses has utilized their resources to help the community we are serving. In March, NetEase Group distributed one million copies of anti-pandemic gift packages to cater to people's entertainment, work, and consumption needs. More recently, leveraging the advantage of our supply chain, Yanxuan mobilized 50 pounds of fresh vegetables from our fresh food suppliers for people in COVID-affected areas of Shanghai. Additionally, leveraging the power of music as an inspiring and uniting cause, we distributed another five million Cloud Music annual memberships for free to the people in Shanghai and surrounding provinces with the goal of using music to comfort and inspire those impacted by the pandemic. This concludes William's comments. I will now provide a brief review of our 2022 first-quarter financial results. Given the limited time on today's call, I will present some abbreviated financial highlights. We encourage you to read through our press release issued earlier today for further details. Total net revenues for the first quarter were RMB23.6 billion, or US$3.7 billion, representing a 15% increase year-over-year. Net revenues from online game services were RMB17.3 billion, up 15% year-over-year. The additional growth was primarily due to the increased revenue contribution from the launch of new games such as Naraka: Bladepoint and Harry Potter: Magic Awakened. Net revenues from our mobile games accounted for approximately 67% of total games revenue. Youdao's net revenues were RMB1.2 billion, compared with RMB1.3 billion in the same quarter last year. Youdao discontinued its after-school tutoring services for academic subjects under China's compulsory education system, K-9 since the fourth quarter of last year due to regulatory requirements. If we exclude the discontinued business, Q1's apple-to-apple revenue stayed relatively stable compared with last year. On the other hand, the smart devices business maintained a steady growth trajectory, with net revenues up 25% year-over-year. Net revenues from Cloud Music were RMB2.1 billion, up 39% year-over-year. The increase was primarily due to increased revenues from membership subscriptions and social entertainment services. Net revenues for innovative businesses and others were RMB3 billion, up nearly 12% year-over-year due to business development and seasonality impact of various lines. Our total gross profit margin was 54.5% in the first quarter, up slightly compared with 53.9% in the first quarter of last year. GP margin for our online game services remained stable at 65.1%. As a reminder, this number is generally stable with some narrow fluctuations based on the revenue mix of mobile and PC titles, as well as self-developed and licensed games. GP margin for Youdao was 53.1% compared with 57.3% in the same period last year. The decline was mainly due to the lower revenue proportion from Youdao's learning services which carry a relatively higher margin. GP margin for Cloud Music excelled in this quarter, climbing to 12.2% versus 4.1% in the preceding quarter and a negative margin of 3.1% in the same period last year. The significant margin improvement primarily resulted from strong top-line growth, as well as improved content cost control. Additionally, this marks our fourth consecutive quarter of positive growth in GP margin for Cloud Music. Gross profit margin for innovative businesses and others was 23.3%, flat compared with 24.1% in the first quarter of last year. Total operating expenses for the first quarter were RMB7.3 billion or 31% of our total net revenues. If you look at our costs in more detail, our selling and marketing expenses as a percentage of net revenues were 12% compared with 13% last year. The change was mainly due to less marketing spending related to Youdao. If we exclude Youdao, our selling and marketing expenses as a percentage of net revenue were 11% compared with 10% last year, mainly due to increased spending on certain games' promotions in the first quarter. Our R&D expenses were RMB3.4 billion or 14% as a percentage of net revenues. We remain committed to investing in content creation and product development, which is core to our revenue growth. Other income was RMB28 million for the first quarter. The quarter-over-quarter and year-over-year decrease resulted from the fact that we had certain publicly traded securities in our current investments and the prices of such securities declined meaningfully in the first quarter. We are required under US GAAP to reflect these fair value changes. The effective tax rate was 22% for the first quarter. As a reminder, the effective tax rate is presented on an accrual basis and the tax rate differs from each of our entities depending on the applicable policies and our operational results. Our non-GAAP net income attributable to our shareholders for the first quarter of 2022 totaled RMB5.1 billion or US$807 million. Non-GAAP basic earnings per ADS was US$1.23 or $0.25 per share. Our cash position remains strong. As of the quarter end, our total cash, cash equivalents, current and non-current time deposits, and short-term investment balance totaled RMB107 billion compared with RMB103 billion as of the year-end of last year. In accordance with our latest revised dividend policy, our Board of Directors has approved a dividend of US$0.0644 per share or US$0.322 per ADS. Lastly, under our share repurchase program, approximately 20.1 million ADS have been repurchased as of the first quarter end for a total cost of approximately US$1.9 billion. Thank you for your attention. We would like to now open the call to your questions. Operator, please go ahead to the Q&A.

Operator, Operator

Thank you. We will take our first question from Alicia Yap at Citigroup.

Alicia Yap, Analyst

Hello. Hi. Yes. Thank you. Can you hear me? Okay.

Charles Yang, CFO

Hi, Alicia. Yes, Alicia.

Alicia Yap, Analyst

Yes. Hi. Thank you. My question is about your overseas studio. Given your recent establishment of studios in the US and Japan, could you provide information about your hiring plans, game development initiatives, and your perspective on overseas talent and future game growth? Thank you.

William Ding, CEO

Thank you. The development of the overseas market is extremely important to us. Currently, around 80% of our R&D resources are located in China, while 10% to 20% are allocated to international markets. Looking ahead, we aim to achieve a distribution of 40% of our R&D resources in overseas markets. We are actively collaborating with international development teams to co-develop game content. Internally, we have a clear strategy for achieving a balanced revenue split between the overseas and China markets. We hope that both regions will contribute significantly to our overall revenue. Thank you.

Alicia Yap, Analyst

Thank you.

Operator, Operator

Okay. We will take our next question from the line of Yan Bai from CICC. Your line is open, please go ahead.

Unidentified Analyst, Analyst

Thank you for taking my question.

Operator, Operator

Are you on speaker phone because your line is breaking?

Unidentified Analyst, Analyst

Hello, can you hear me now?

Margaret Shi, IR Director

His first question is about the impact of the overseas games market and how that would affect our profitability for the games business. The second question was regarding what other regions, in addition to the Japanese market, we are considering for self-publishing.

William Ding, CEO

Okay. So, for convenience, I will answer these questions directly in English. When we think of our overseas games' increased contribution, obviously, we are in a ramp-up phase. However, as we grow more diversified titles across different geographies, like I mentioned in previous quarters, the margin profile shouldn't be very different between domestic games and overseas games in a steady state. Instead, it is more correlated to the gross billing. Thus, we are very confident in the next three to five years' time as we continue to expand the scale and presence in the overseas market, when we have multiple hit titles that universally appeal to the users, those games will demonstrate very, very strong and similar margin profiles as what we have been experiencing with some of our very long-lasting legacy titles here in China. Now, regarding your second question about our publishing capability, as you may have noticed, NetEase remains very determined in major markets such as Japan. For some titles, even in the Western market, we strive to learn and control our own publishing capability. This is something we have to gradually build up and learn as we become a truly global game company. You may have noticed that we've successfully self-published games like Knives Out and Identity V in Japan, and we are going to publish Harry Potter: Magic Awakened in Japan. We are globally publishing Lord of the Rings. I think, going forward, with more content partners, with more IP partners and with more self-developed or co-developed titles, our global publishing capability, particularly in major markets will be further strengthened. Operator, next question, please.

Operator, Operator

Okay. We will take our next question from the line of Jialong Shi from Nomura. Your line is open. Please go ahead.

Jialong Shi, Analyst

Thanks for taking my question. Your game deferred revenue rose by 1% sequentially in the first quarter, even though you did not launch any new titles during that period. Could you provide some insights on the factors that have contributed to this increase in your deferred game revenue? I am curious if this recovery is related to the lockdown.

William Ding, CEO

Thank you, Jialong. I'll answer this financial question directly in English. We’ve rephrased deferred revenue into contract liabilities just to be more precise and accurate under the accounting literature. Yes, as you may have noticed, our contract liabilities increased slightly for games, if you exclude Youdao from that. It's largely attributable to our strong Q1 growth, Q1 performance of PC games. As you may know, the Chinese New Year period is typically a seasonal peak for PC games, and Fantasy Westward Journey, after almost two decades of operation, have recorded a new record high quarterly gross billing and quarterly revenue in the first quarter. World of Warcraft also performed fairly strong in the first quarter, contributing to our strong game contract liabilities that have been recorded in the first quarter. That's the main reason. Operator, next question, please.

Operator, Operator

Okay. Thank you. We will take our next question from the line of Felix Liu from UBS. Your line is open. Please go ahead.

Felix Liu, Analyst

Thank you, and thank you to management for taking my questions. My first question is about Diablo Immortal. First, congratulations on the launch. Could you provide any expectations regarding revenue or user metrics for this game? Additionally, which overseas markets will NetEase handle for distribution? I would also appreciate any insights on the long-term collaboration with Microsoft and Activision Blizzard following the game's launch. My second question is about Yanxuan, specifically regarding the impact of COVID-19 on the Yanxuan business in the second quarter and any potential turning point. Thank you.

William Ding, CEO

Thank you, Felix. I'll answer your question directly in English. First of all, regarding Diablo Immortal, we are a co-developer under the partnership agreement and receive a share of its global revenue. NetEase is responsible for game publishing in Mainland China, while Blizzard handles publishing in the rest of the world. We also have a strong business partnership with Microsoft, as we've been their exclusive partner for Minecraft for several years. With Microsoft's announced acquisition of Activision Blizzard, we look forward to a stronger partnership between NetEase and the Microsoft franchise, considering we provide premium content. Microsoft has outstanding first-party studios and an effective Xbox distribution platform, creating various opportunities for future collaborations. As for your second question about Yanxuan, we will have Yanxuan's CEO address your inquiry.

Unidentified Company Representative, Company Representative

So it's trading in certain regions. We believe that our fulfillment and logistics system has been somewhat impacted by the pandemic. Since the end of March, the fulfillment time has been much longer than before. The good news is that, since May, we've seen a much more meaningful improvement and progress. We think that progress is still ongoing. Thank you.

Charles Yang, CFO

Operator, next question please.

Operator, Operator

We will take our next question from the line of Lincoln Kong from Goldman Sachs. Your line is open. Please, go ahead.

Lincoln Kong, Analyst

Hi. Thank you for taking my question. I would like to ask about the overseas game market and our monetization strategy for international games. We've observed strong engagement with DBT Mobile in Japan, but it has not grossed as much as expected. We believe that the monetization measures for these international games are evenly distributed throughout their product life cycle. With that in mind, how should we approach the upcoming high-profile international titles in the second half of the year, particularly concerning the broader Japanese market? Additionally, how do we perceive the outlook for the Japanese mobile game market this year, especially since the year-to-date grossing appears to be slightly weaker than anticipated? Thank you.

William Ding, CEO

Yes, it's true that overseas markets are completely different from the China market. In China, the majority of the revenue from games comes from mobile games, whereas overseas, we have console, PC, and mobile games. This results in a different type of game with varied amortization patterns, which can also differ across countries. Despite these differences, we don't anticipate significant challenges for NetEase. With decades of experience in gaming research and development, we should be able to quickly discover ways to meet the needs of users and players in different countries and on various types of devices. Thank you. Next question please.

Operator, Operator

Okay. We will take our next question from the line of Natalie Wu from Haitong International. Your line is open, please go ahead.

Natalie Wu, Analyst

Thanks management for taking my question and congratulations on a very strong quarter. My question is about the pandemic's impact on our game business. Can you comment on how the reopening of overseas markets has affected your games business? Some of your peers mentioned that they experienced weaknesses due to this. Have you seen a similar situation? Additionally, during the domestic lockdowns, did you observe an increase in the time and money spent on your games? Thank you.

Charles Yang, CFO

Hi Natalie, it's Charles. In the interest of time, let me answer your question directly in English. The COVID situation has lasted more than two years. Frankly speaking, I think everyone is a victim of this COVID situation. The game industry, or broadly speaking, the entertainment industry, is probably a little bit more fortunate that we are less severely impacted by COVID than many other businesses. Frankly speaking, we do not observe any weakness from our overseas market right now because we are fairly new. We are in the early stage of executing our ambitious global strategy. As we continue to launch more games, we feel quite confident about our growth, particularly in the second half of this year when many of our exciting, highly anticipated games will be unveiled to the international game audience. Now, speaking of the domestic market, for the past quarter, the Chinese New Year period is, as I said, a strong seasonality for PC games, but we are not seeing any meaningful so-called enhanced ARPU or timing spend on mobile. Mobile has remained relatively stable. Thus, you are not seeing any significant highs and lows of obvious seasonality or one-off implications caused by the lockdown. I think our game development philosophy is fairly consistent and straightforward. There are a lot of these macro situations beyond anyone's control. What we could do is try to observe the shifting user experience preferences and cater to their shifting references by diligently and regularly rolling out content updates through innovation, and fresh gameplay, etc. I think that is kind of an open secret we've been adopting and operating for the last two decades. From PC screens to mobile screens, through good economies and bad economies, I think that's something that we have learned from COVID, and from our past two decades of experience, is that we remain user-focused and content-focused, which will keep us on the right track.

Operator, Operator

Maybe we have time for one last question. Okay. Thank you. We will take our last question from the line of Thomas Chong from Jefferies. Your line is open. Please go ahead.

Thomas Chong, Analyst

Thank you, management, for taking my questions. Can I ask about the regulatory environment for the online gaming sector concerning the resumption of the ban on approvals? Should we anticipate any new regulations or upcoming changes? Additionally, how should we view the outlook for the domestic gaming sector in terms of growth momentum in the coming years? Thank you.

William Ding, CEO

We are quite optimistic about the growth of the Chinese gaming market, which is a popular form of entertainment among the younger generation. As you noticed, there were new license approvals in April. I believe that moving forward, the policy will continue to support game content that could be beneficial and educational for gamers and players. Thank you.

Margaret Shi, IR Director

Thank you. Thank you very much. I think that will end our call. Operator?

Operator, Operator

Okay, thank you.

Margaret Shi, IR Director

Thank you once again for joining us today. If you have any further questions, please feel free to contact us directly or TPG Investor Relations. Have a great day. Thank you.

Operator, Operator

That concludes today's conference. Thank you, everyone, for your participation.