Rush Street Interactive, Inc. Q4 FY2022 Earnings Call

Good afternoon, and thank you for joining Rush Street Interactive's Fourth Quarter and Year End 2022 Earnings Call. My name is Jason, and I will be the moderator for today. All lines will be muted during the presentation, and there will be a chance for questions and answers at the end. Now, I will hand the conference over to our host, Kyle Sauers.

Thank you, operator, and good afternoon. By now, everyone should have access to our fourth quarter 2022 earnings release. It can be found under the heading Financials, Quarterly Results in the Investors section of the RSI website at rushstreetinteractive.com. Some of our comments will be forward-looking statements within the meaning of Federal Securities Laws. Forward-looking statements are not statements of historical facts and are usually identified by the use of words such as will, expect, should, or other similar phrases and are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we expected. We assume no responsibility for updating any forward-looking statements. Therefore, you should exercise caution in interpreting and relying on them. We refer you to our SEC filings for a more detailed discussion of the risks that could impact our future operating results and financial condition. During the call, we will discuss our non-GAAP measures, which we believe can be useful in evaluating the company's operating performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available in our fourth quarter 2022 earnings release and our investor deck, which is available in the Investors section of the RSI website at rushstreetinteractive.com. With me on the call today, we have Richard Schwartz, Chief Executive Officer, who will first provide some opening remarks and then open the call to questions. With that, I'll turn the call over to Richard.

Thank you, Kyle. Good afternoon and welcome to our fourth quarter and year-end 2022 earnings call. Last year was excellent as we made significant progress toward our long-term goal of building a sustainable and profitable business. We are in a strong position as we begin 2023 to maintain the right balance between revenue growth and achieving our profitability targets, while also balancing investments in online casino and sports betting. In 2022, we achieved a year-over-year revenue growth of 21%, all while adhering to a disciplined approach in customer acquisition and retention spending. We expanded our platform into five new markets, including Ontario, Mexico, New York, Maryland, and Louisiana. In the fourth quarter, we maintained a leading monthly revenue per user rate of $327 and experienced a 22% increase in our monthly active users. We made significant upgrades to our proprietary technology and platform, particularly enhancing our online betting user interface, features, and functions, earning us recognition for having one of the top products in the industry. We closed the year with a solid cash position, holding $180 million in unrestricted cash and no debt, which we believe fully funds our path to sustained profitability. We ended 2022 with record revenues of $590 million. Those familiar with our journey will recognize that our revenue growth is strategic and reflects our proven ability to acquire and retain customers at prudent investment levels. We prioritize offering a best-in-class user experience that engages and delights players by providing enjoyable and fair betting experiences. Analyzing our results, we see a combination of robust revenue growth, disciplined marketing expenditure, improving gross margins, and moderate growth in corporate G&A costs, reinforcing our trajectory toward profitability. As previously indicated, we anticipate achieving positive adjusted EBITDA in the latter half of 2023. Kyle will elaborate on this, but we've set our 2023 full-year revenue guidance between $630 million and $700 million. Now, I’d like to share insights on our markets. Overall, across our U.S. markets, we continue to see solid revenue growth and high volumes for online casino and sports betting where we operate. Notably, our Latin American and newer North American markets launched after 2020 experienced a remarkable 95% revenue growth last year, demonstrating our capability to thrive in new markets despite not having player databases or significant brand recognition at launch. In our latest sports-only states, Maryland and Ohio, we have adapted our approach by reducing early marketing investments compared to prior market launches, expecting a corresponding effect on our market share while facilitating quicker recovery of our initial investments. Internationally, our performance in Colombia has been strong, with revenue growing significantly YOY. In the fourth quarter, Colombia saw an impressive 89% increase in Colombian pesos, translating to 53% growth in U.S. dollar terms. During this quarter, we also announced new offices in Bogota and Medellin to bolster our Latin American operations. In Ontario, we are encouraged by our performance, despite the competitive landscape with 26 additional sites launching or transitioning to regulation in the fourth quarter. Our strength in online casino continues to benefit us, with a sequential growth of nearly 30% during the fourth quarter. In Mexico, we emphasize a cautious and strategic approach to our growth, focusing on building a foundation for stable, long-term profitability and brand awareness through partnerships. We anticipate a more significant contribution from Mexico in the latter half of this year, as our foundation is being established. Looking ahead, we see increased discussions in our industry regarding online casino legislation, with five bills already introduced this year, signaling a greater legislative focus in this area. The online casino market and online flat market have the potential to surpass the sports betting market, offering RSI a significant advantage, as we often capture three to five times the market share in online casino compared to sports betting. In terms of marketing, we ramped up spending heading into the winter months, particularly in our casino markets and for the rebranding of BetRivers in New Jersey. Overall, our full-year marketing expenditure decreased by about 140 basis points compared to last year as a percentage of net revenue, even with a heavy investment in the first quarter. Analyzing marketing spend over the past three quarters reveals an improvement of 560 basis points year-over-year. We remain disciplined in our strategy, as reflected in our results, with improved marketing efficiency yielding a one-third reduction in player acquisition costs in the second half of the year compared to the previous year. We prioritize earning and retaining customer loyalty through thoughtful interaction and leveraging our development expertise to enhance user experiences and minimize friction. This operational philosophy is pivotal for achieving sustainable long-term profitability. In terms of product and innovation, our teams made substantial progress this quarter, enhancing user experience through improved efficiencies. We have implemented features like custom lobby layouts for casino games, personalizing experiences based on player preferences. We also introduced machine learning to enhance our recommendation engines and improve player engagement with our games. For sports, our single-game parlay product has seen substantial enhancements, leading to a 30% increase in single-game parlay bets this NFL season. Additionally, we launched our proprietary squares game, which has been well received, allowing free randomized squares for NFL games and boosting payouts based on betting criteria. Following its mid-season launch, 25% of football bettors engaged with this feature, and our average bet size increased by 10%, alongside strong reactivation activity. Following this success, the squares innovation has now transitioned to basketball with a new NBA functionality. With that, I'll turn the call over to Kyle.

Thanks, Richard. Fourth quarter revenue was $165.5 million, up 27% year-over-year and up 12% quarter-over-quarter. Full year 2022 revenue was $592.2 million, up 21% year-over-year. This marks our 15th consecutive quarter of revenue growth. For the full year, we experienced solid revenue growth in all of our markets, except for one of our smaller US states. As a result, we grew nicely in both online casino and online sports during the year. We continue to see positive signs in our player acquisition and retention as measured through monthly active users. Fourth quarter North American miles were 149,000, up 22% year-over-year. The increase reflects our successful efforts in player acquisition and retention across online casino and sports betting, plus the addition of new jurisdictions compared to the same period last year. In terms of player engagement and monetization, average revenue per monthly active user was $327 during the fourth quarter, which is stable compared to the same period last year. We remain very pleased with our healthy art mouths as we continue to attract and retain high-quality players to the platform. As a reminder, the new states we launched last year required various levels of investment during 2022. However, we're beginning to see some benefits. As Richard touched on, we continue to target adjusted EBITDA profitability for the second half of this year. Our fourth quarter adjusted EBITDA loss was $17.3 million, which is a 45% improvement from the fourth quarter last year. For the year, our EBITDA loss was $91.8 million, which is an increase over 2021, primarily due to the new market investments we made in the 11 markets that launched during 2021 and 2022. In fact, those 2021 and 2022 vintage launches accounted for about $80 million of our $92 million loss during this past year. As these markets mature and build, our marketing expenses come down and our margins improve. Our anticipation is that these 11 market launches in aggregate will be contribution positive for 2023. Advertising and promotions expense was $63.2 million for the fourth quarter, down slightly from last year's fourth quarter. As we previewed on our last call, our marketing spend for the fourth quarter was up sequentially from the third quarter. That being said, we expect this figure to go lower over the coming quarters as we move closer to adjusted EBITDA profitability. For 2023, marketing costs should be lower than 2022 both as a percentage of revenue and in absolute dollars. We expect to spend more during the first half than the second half as a result of the recent launches in Mexico, Maryland, and Ohio, and Ontario market that is still less than a year old and the rebranding efforts in New Jersey that Richard mentioned earlier. We remain committed to spending rational amounts to acquire players, monitoring the value of those players and the channels through which we acquire them, investing more when we see solid returns, and reducing or eliminating marketing where it doesn't make economic sense. Gross margins improved sequentially, again in the fourth quarter and ended the year at 30.1%. Gross margins should improve again in 2023 where we expect to see a full-year benefit of several hundred basis points. G&A costs increased slightly in the fourth quarter to $13.3 million, up from $12.7 million in the third quarter. We continue to make prudent investments in the growth of corporate and our technology and product teams. So we expect G&A to continue to grow modestly over the coming quarters. Our balance sheet remains pristine, and as Richard highlighted, we believe we're fully funded to profitability. We ended the year with $180 million in unrestricted cash and no debt. We've initiated full-year revenue guidance for 2023. We currently expect revenue to be between $630 million and $700 million. As a reminder, our guidance includes only those markets that are live as of today. We continue to execute well on our growth strategy, while managing our costs appropriately. We have a strong balance sheet, no debt, and a strong position in our new and existing markets. As such, we have the flexibility to make investments where we can generate the best possible returns for our shareholders and reducing or eliminating initiatives where we don't see solid returns. All this gives us a continued clear path to profitability. With that, operator, please open the line for questions.

Hi, good evening. This is Sam on for Chad. Thanks for taking my questions. First question, I wanted to touch on the World Cup and what you guys saw in Latin America as it relates to customer engagement, acquisitions, and how it played out relative to your expectations? And if there are any major differences with what you saw in North America during that same time period?

Sure, Sam. This is Richard. The impact on our business was significantly stronger in Latin America, especially in Colombia, where the interest in soccer was immense. We seized a great opportunity to attract many new players and engage our existing customers, resulting in a very successful World Cup for us. We feel very confident about our presence in the Colombian market, as the quality of customers has been strong and the overall experience was positive. However, I want to note that during the World Cup, the other soccer leagues take breaks for several weeks, which can affect revenues due to the altered schedule. That said, the strength and growth associated with the World Cup generally compensate for this. Overall, it's been a very positive outcome for us in that region. In the US, the impact was less pronounced but still favorable.

Okay. Awesome. Thank you for that. As a follow-up, I just wanted to touch on hold generally for both iGaming and sports. Wondering how much of an impact it had on your quarter, positive or negative. And if you see hold as a potential upside opportunity for the business over the next couple of years, as it relates to single-game parlays for sports and just sort of how you're thinking about it long-term and balancing customer retention and so forth?

Yes, I'll take the first part. Just on the specific impact or really lack thereof in Q4, and then maybe Richard will weigh in on longer-term strategies and player experience. But as I alluded to, we really didn't have much of an impact, positive or negative, from hold in Q4 either casino or sports; they both fell into the range of possibilities that we expect when we're doing our planning and when we offer guidance. So, nothing really exciting to share there.

In terms of our long-term objectives, we always see potential for improvement in margins. However, we have clearly stated that being overly aggressive with certain customers can be counterproductive. We place great importance on the long-term value of customers and their retention over many years rather than just a few months. We also believe that a strong customer experience increases awareness among some clients. If we focus too much on margin settings, we risk shortening the customer lifecycle, which in turn reduces profitability from those clients. Therefore, we take this into consideration carefully and discuss it frequently. There are definitely opportunities to enhance our offerings, especially in higher-margin sports products. We are particularly focused on the single game parlay, and we are beginning to see positive results from our efforts in that area.

Thank you for taking my question. I would like to follow up on online or iCasino and request an update on potential legislative developments, particularly with New York possibly having a meeting in the Midwest. Additionally, could you provide insights into your Latin American growth strategy and what progress you've made in gaining market share in Mexico compared to your competitors? Thank you.

Sure, I'll discuss online casino legislation and touch on the question about Mexico as well. With regard to online casinos, the industry is more united than I've seen before, leading to significant investments and lobbying efforts aimed at legalizing online casinos, a movement that hasn't been this active in the last decade. This is very encouraging. It's evident that casinos represent a larger and more profitable segment, and both the industry and lawmakers are beginning to understand the benefits of this partnership. Although it's difficult to predict specific timelines for when legislation will be introduced, there's definitely progress, as evidenced by discussions evolving into actual drafts that have resulted in the introduction of bills in states such as New York, Illinois, Indiana, and Maryland. We've seen legislation proposed this year, which is promising. While we may not see immediate results, the key is to engage a bill sponsor who is enthusiastic about moving forward, and we're witnessing that interest start to build. Efforts and lobbying resources are increasingly directed towards this objective, which means we're building real momentum. This is beneficial for us, as we believe we hold a significant share of casino revenues and perform well in casino markets. Hence, this momentum is very encouraging for our position. Now, regarding Mexico...

I'll address the question regarding Latin America. In Colombia, we've seen incredible success in the fourth quarter, as Richard mentioned. Our market data shows that we're nearing a 20% share, placing us in a solid third position. With nearly 90% growth in the fourth quarter in Colombian currency, it's hard to believe we've lost momentum in Mexico. It's still early, and we haven't changed our expectations, looking forward to seeing more significant contributions from Mexico in the latter half of this year. We don't have updates on market share yet. Regarding our growth plans, the potential in Mexico is substantial. To give you a comparison, in Colombia, we generated about $4 million in revenue in our first year and $15 million in the second year. We anticipate a quicker pace in Mexico due to its larger market and more favorable demographics. We have advantages in launching there with our media partner that we didn't have when we started in Colombia. Although we're just beginning in Mexico, we're already outpacing the early growth pattern we observed in Colombia, and we're very excited about the opportunities ahead.

Just to add on, one quick thing on Mexico, our focus really, as I've said before, is to localize the user experience to make it a top-rated experience because the quality really matters. And so, we've been doing that very effectively. In fact, our ratings on our app and our feedback from our customers has improved dramatically since we entered the market, and we've been putting the effort into making sure we do the little things that matter to the customer, and we feel we're in a very strong position there to be able to take that effort and start to deliver long-term value from it in the future.

Thanks for taking the questions. Maybe to start dovetail at the last one. Just any additional color you could provide on the guidance between international versus domestic growth? I know international, or at least Colombia, is going to have some pretty significant headwinds on FX for the rest of the year and maybe any thoughts on US market share versus market growth? And then secondly, now that market efficiencies are improving by a third, how much of that was just lower cost to acquire customers versus anything you guys are doing differently, whether it'd be data science or change in strategy? Just any additional insights there would be helpful.

Yes. I will address the first part by discussing our revenue growth this year and its anticipated sources. I won't go into a detailed breakdown of international versus US or North American markets. We mentioned earlier that approximately 80% to 90% of our growth is expected to come from markets that have been operational for over a year. If you consider growth on a same-store basis, that serves as a general guideline. Most of the growth in 2023 will originate from our North American markets launched after 2020, as well as Latin America. In our prepared remarks, Richard pointed out that this group of markets experienced a 95% increase last year. At the midpoint of our guidance, we expect Latin America and the later US markets post-2020 to grow around 35% in the upcoming year. Notably, about two-thirds of our revenue last year came from Pennsylvania, Illinois, and New Jersey. Both Pennsylvania and Illinois had a strong start following their launches. While all three markets have become more competitive, our anticipated growth in those areas is somewhat modest. However, the key takeaway is that the markets where we entered without an established brand or casino database are performing well, indicating positive prospects for both new and future market launches.

In terms of your second question. Our maturity as an organization, as a marketing team allows us to know what works better and what doesn't work. And so obviously we're applying more efforts towards the marketing strategies and marketing channels that deliver the best results. We've also always been very disciplined and that continues to be the case where we have defined paybacks for each market and each vertical. And so while it is true that we are getting some opportunities back from other operators who maybe were investing in certain channels and have no longer continued investing there, many times those opportunities come back to us; they are still at a higher rate than what we were willing to pay at the highest level for that market. So I would say that there is a combination of something that’s becoming more affordable, but a lot of it is investment we've made in data science as you referenced, combined with our teams developing maturity and experience in what works and doesn't work and continuing to be disciplined and making sure that we only invest in the markets that are going to give us the best return on capital.

Good afternoon, Richard and Kyle. I wanted to follow up on the revenue guidance. Can you discuss some of the factors that influence the low end and high end of the range? Is it due to new competition in these markets, the extent of promotions, or the growth in Mexico? Understanding these elements will help us better assess the low and high ends of the range. Thank you.

Sure. Thanks, Dan. I think you called out some of the things that we model; obviously, competition is a little harder to model other than the way you apply that to what you think a market size might be and what your share of that's going to be, but it's really about the costs that we're going to acquire players for, which we've got some standards for. The value that those players are going to produce, the new players, the retention that we have with our existing players and the value that those players bring. And then another piece that impacts us and others in the space is going to be hold, which can have a difference in any given quarter. More volatile in sports, as I'm sure you're aware. And then probably the other piece is, in newer markets, you mentioned Mexico, I think that's a fair example. We probably don't have as strong visibility into how that could turn out relative to a market that's been around for a couple of years that we've been operating into. So the variability on a market like Mexico, we could do far better or maybe not quite as well as we'd expect to. So all of those factor into this range and the different inputs that are going in.

Hi, thank you for taking my question. It looks like on the gross margin side, for the fourth quarter there is a really nice sequential uptick Q-on-Q and that's kind of despite 4Q being a pretty big OSB quarter. What's kind of driving that Q-on-Q increase? And I guess, is that a kind of sustainable rate kind of in the mid '30s for next year maybe excluding the first quarter when there are some new market launches?

Thank you, Ed. During our last call, we mentioned our expectations for higher gross margins in the fourth quarter. Several factors can influence our margins each quarter, with the geographic mix being significant since we have varying margins across different markets. Additionally, the product mix between OSB and casino plays a role, and there can be variability within casino products as well. Most of our costs are variable with revenue, although we do have some fixed costs that can also affect the margin structure. For 2022, our margins were at 30.1%. However, I wouldn't project Q4 margins into the full-year 2023. We anticipate an overall improvement in 2023, targeting a few hundred basis points above the full-year 2022 margins, likely around 33% or slightly higher. There will be some fluctuations, particularly with new market launches occurring at the beginning of this year and late last year. Therefore, while I provided a target for full-year 2023 gross margins, I expect them to gradually improve throughout the year, likely being lower in the first half and stronger in the second half due to economies of scale and pricing advantages.

Yes. A very small percentage is fixed. To clarify, when you mention fixed, are you referring to multi-year commitments related to sponsorships or endorsers?

Yeah. Even headcount within your marketing department.

We view that as a relatively fixed cost, and we have a strong marketing team at RSI. The team along with our long-term commitments accounts for about 10% to 15% of our total costs, though it's likely on the lower end of that range now. This allows us significant flexibility in our spending, enabling us to adapt and increase investment where we see positive returns or reduce it as necessary.

That said, and then I guess is there a way to think about how low that marketing cost can go during the year when there is no new state launches?

You're asking about revenue projections three years out. I prefer not to provide a specific percentage or figure at this moment, as we haven't given long-term guidance on that matter. There is potential for marketing spending as a percentage of revenue to decrease as markets evolve. This will be influenced by the competitive landscape and potential new regulations in sports or casinos, as well as our willingness to invest based on perceived opportunities. We plan to stay adaptable in our marketing investments, and we have demonstrated that we've maintained a balanced approach, achieving significant results with modest spending.

Hi. Evening, gentlemen. Thanks for all the detail. I wanted to maybe just take a longer-term view and looking at the revenues growing right in the double digits out for a couple of years, and I know you're on the cusp of pivoting to profitability, but is there an aspirational margin level you think you can get to for this business one day? Like people look in Europe, right, 25%. I mean, are those kinds of things achievable? And do you have what you need over time to get to that place?

Yes, David. Thank you for your question. We see a genuine opportunity for this business to achieve long-term, consistent, and sustainable profitability. The range you mentioned seems reasonable. We believe we are still in the early stages of growth for this industry and our company. Over time, we expect to gain leverage. As we've noted, we continue to invest in our technology team and corporate infrastructure, and that will continue this year. However, we anticipate gaining leverage over those costs in the long run. Our marketing expenses have significantly increased in recent years due to numerous new market launches compared to the total number of markets we were operating at the time. This affects revenue when examining marketing spend relative to net revenue. As we launch new markets, the impact on our total cost base diminishes, which should lead to a decrease in marketing as a percentage of revenue as markets mature with fewer new launches. Additionally, we've mentioned that gross margins are expected to improve in the coming years because of scale and cost efficiencies, particularly as our revenue mix shifts towards higher-margin states. Some of our earlier larger markets have lower gross margin profiles, like Pennsylvania, which has a high tax rate. Overall, we are very optimistic about the leverage we can achieve, which will help us drive stronger EBITDA margins in the long term.

Good afternoon, guys. This is Will on for Ryan. Thanks for taking our questions. First I wanted to touch on, you talked a bit about parlay mix and it being up 30% year-over-year. I was wondering if you had any insight into how in-play mix trended during the quarter?

Yeah, we haven't typically disclosed that one. I'd actually have to look. I don't know if it was a huge difference for us in NFL. It's generally trending up, but I don't have that number in front of me. We can get back to you on that.

Perfectly fine. And one more from me. With the potential for new competitors in Pennsylvania, especially in the iGaming market, there has been a bit of talk about them opening up bidding to new operators. Curious what you guys are going to do to defend your leading share there?

Since we started this business over 10 years ago, we have consistently faced competition from both new and existing players in the markets we operate in. I believe we have done an excellent job of maintaining our market share well above what would be expected based on our invested capital. Pennsylvania serves as a strong example; we have held significant market share for years, have a strong brand presence, and have created an excellent experience for players. This has allowed us to maintain a leading position in online slots, despite the arrival of new competitors. I agree that competition in Pennsylvania will remain intense. In the online casino sector, there are many licenses available, and while the tax rate is relatively high, we focus on staying ahead by continuously innovating and improving the user experience. We cannot control our competitors, but we can control our execution and how we innovate to create appealing experiences for players. We have been successful in this regard over the years and remain focused on it now. I have many promising ideas in development that we believe will significantly benefit us in this area.

Thank you for taking my question. With all the discussion around iGaming legalization, which is primarily in states that already have online sports betting, can you remind us of the payback period if we introduce iGaming in an existing state?

Thanks, Jordan. You're right; most of the discussion is focused on states where we're already operating. This will certainly vary by state, depending on tax rates, the competitive environment, and whether we're entering with a partner or if it's an open opportunity. We have a significant advantage in being established in the market. We have a player database and a recognizable brand, which are substantial benefits. Looking at the two most recent US states that launched casinos, Michigan and West Virginia, both were profitable after four quarters in the entire market. While I wouldn't want to commit to that for states like New York, Illinois, Iowa, or Indiana launching, we certainly have more advantages now compared to when we started in Michigan and West Virginia. Historically, in markets with both casino and sports, we tend to hold three to five times the market share in casino compared to sports. For example, in Illinois, if we have a double-digit share in casinos and a low single-to-mid single-digit share in sports, achieving three times that in any of those states would be quite significant for us. We're very enthusiastic about the legislative developments and the industry's increased focus on iCasino.

Great. And then my follow-up. Looking at the MAU number. I'm not sure if you'll give this, but I'll try it anyways. Are you able to parse out kind of the quarter-over-quarter growth end users from the US versus what those contribute in Canada?

I think we'll probably stop short of that request. It was a good attempt. The growth in Q4 in Ontario is entirely incremental for us and is certainly significant to our overall numbers. Additionally, it's important to note that the MAU numbers we provided are only for North America, specifically the US and Canada. They do not include our Latin American countries, where the MUAs are much higher and our MAU is lower compared to our North American markets.

Hi, thank you for taking my question. It looks like on the gross margin side, for the fourth quarter there is a really nice sequential uptick Q-on-Q and that's kind of despite 4Q being a pretty big OSB quarter. What's kind of driving that Q-on-Q increasing? And I guess, is that a kind of sustainable rate kind of in the mid '30s for next year maybe excluding the first-quarter when there are some new market launches?

Thanks, Ed. We mentioned in our last call that we anticipated higher gross margins in the fourth quarter, although various factors can influence our margins from quarter to quarter. The geographic distribution of our business plays a significant role, as margins differ from market to market. Additionally, the product mix, particularly between OSB and casino, can also affect margins, along with variations within the casino product mix. Most of our costs are variable with our revenue, but we do have some fixed costs in our margin cost structure that can impact margins as well. Overall, our margins for 2022 were 30.1%. I wouldn't project fourth-quarter results into the full-year 2023 since we expect an improvement in 2023, reaching a few hundred basis points above the full-year 2022, placing us in the 33% range, maybe slightly higher. Of course, there will be some variability to consider. As you noted, we have a couple of new market launches at the beginning of this year or late last year. I believe our gross margins, while I've provided a target for the full-year 2023, are likely to build throughout the year, being a bit lower in the first half and stronger in the second half due to economies of scale and pricing benefits we expect from our cost structure. Thank you again for joining us today. We look forward to updating you on our progress when we share our first quarter results in a couple of months.

That concludes the conference call. Thank you for your participation; you may now disconnect your lines.