Earnings Call Transcript - SONY Q1 2021

Okada, Emcee

Ladies and gentlemen, it is now time to start Sony Group Corporation's Fiscal 2021 First Quarter Earnings Announcement. My name is Okada, in charge of Corporate Communications. I shall be serving as the emcee today. Now this session is being held for journalists, analysts, and institutional investors to whom we have sent out invitations in advance. This is being live webcast through our Investor Relations website today. First, we have Hiroki Totoki, the Executive Deputy President and CFO, to present to you the fiscal 2021 consolidated results and also the consolidated results forecast for fiscal 2021. Then we'll have a Q&A session. The duration is about 70 minutes. Mr. Totoki, please.

Hiroki Totoki, Executive Deputy President and CFO

Thank you very much. I would like to talk about these two topics today. We have changed our accounting standards to IFRS from the current fiscal year. The results for the current quarter and forecast for the current fiscal year and the results for the previous fiscal year, which I will explain today, are all based on IFRS. Fiscal '21 first quarter consolidated sales increased 15% compared to the same quarter of the previous fiscal year to JPY 2,256.8 billion, and consolidated operating income increased a significant JPY 58.3 billion year-on-year to JPY 280.1 billion, both record highs for the first quarter. Income before income taxes increased JPY 14.6 billion year-on-year to JPY 283.2 billion, and net income attributable to Sony Group Corporation's shareholders increased JPY 18.2 billion to JPY 211.8 billion. This slide shows the result by segment for fiscal '21 first quarter. Next, I will show the consolidated results forecast for fiscal '21. Our consolidated sales forecast remains unchanged from the previous forecast. Our operating income forecast has increased JPY 50 billion from our previous forecast to JPY 980 billion, primarily reflecting the results of fiscal '21 first quarter. We have also upwardly revised our forecast for income before income taxes to JPY 955 billion, and our forecast for net income attributable to Sony Group Corporation's shareholders to JPY 700 billion. Our forecast for consolidated operating cash flow, excluding the Financial Services segment, has decreased JPY 20 billion from the previous forecast to JPY 890 billion. Although forecasted operating cash flow will benefit from the upward revision in the forecast for profit, we project an increase in acquisition of content assets such as music catalogs, which are included in operating cash flow under IFRS. This slide shows our forecast by segment for fiscal '21. I will now explain the situation in each of our business segments. First is the Game & Network Services segment. Fiscal '21 first quarter sales increased 2% year-on-year to JPY 615.8 billion, primarily due to an increase in hardware sales resulting from the launch of PlayStation 5 and the impact of foreign exchange rates, partially offset by lower software sales. Operating income decreased a significant JPY 40.6 billion year-on-year to JPY 83.3 billion, primarily due to the impact of the decrease in software sales, a deterioration in hardware profit, and an increase in selling, general and administrative expenses. Our fiscal '21 forecast remains unchanged from the previous forecast. There is no change to this fiscal year's target of selling more than 14.8 million units of PlayStation 5, which was the number of units we sold of PlayStation 4 in the fiscal year after its launch. Fiscal '21 first quarter software and network services revenue decreased 15% compared to the same quarter of the previous fiscal year when stay-at-home demand was high around the world, primarily due to a decrease in software add-on revenue from third-party titles. Nevertheless, Software sales increased 38% compared to the same quarter of the fiscal year ended March 31, 2020, which was before the COVID-19 pandemic, and we believe that the game market has expanded significantly over the last two years. Similarly, total game play time of PlayStation users in fiscal '21 first quarter decreased 32% year-on-year but increased 18% compared to the same quarter of fiscal 2019, showing continued steady growth. Sales of first-party software decreased compared to the same quarter of the previous fiscal year when the Last Of Us Part II was a big hit. But sales of all the titles we have released during the quarter, including Ratchet & Clank: Rift Apart and MLB The Show 21 exceeded our expectations. Thanks in part to strong add-on sales, MLB The Show 21 contributed significantly to sales and profit during the quarter. We have begun to release our first-party titles on platforms other than PlayStation, and MLB The Show 21 was one such title, which followed upon the initial success we had with the PC versions of Horizon Zero Dawn and Days Gone. PlayStation Studios, which oversees our first-party software production on a global basis, is accelerating investments to strengthen its production capabilities. In June, we announced the acquisition of Housemarque, which is the 13th studio under PlayStation Studios. Housemarque is a Finnish studio that has been successful for more than 20 years due to its superb technological capability and creativity. It has received extremely high praise for Returnal, which developed and released exclusively on PS5 in fiscal '21 first quarter. Seven of our 13 studios have been acquired and have produced numerous hits and compelling IP, such as the Last Of Us series, the Horizon series, and Ghost of Tsushima. In July, we announced the acquisition of Nixxes, a Dutch software development company that has excellent technology for porting game software between different platforms such as PCs. We expect that Nixxes will offer technological support to all our studios in a horizontal manner. Going forward, we intend to continue to proactively make strategic investments with the aim of developing new IP, supporting our multi-platform strategy, and strengthening our service offerings, including through add-on content. Next is the Music segment. Fiscal '21 Q1 sales increased a significant 44% year-on-year to JPY 254.9 billion as sales increased in all categories driven primarily by growth in streaming. Sales of products related to Demon Slayer - Kimetsu No Yaiba - The Movie: Mugen Train were the primary driver of the increase in sales of Visual Media and Platform, primarily due to the benefit of the increase in sales. Operating income increased significantly to JPY 55.4 billion, JPY 19.7 billion higher than the same quarter of the previous fiscal year in which a JPY 7.2 billion onetime gain was recorded for the transfer of an equity stake in a third party. Fiscal '21 sales are expected to increase JPY 50 billion compared to our previous forecast to JPY 1.040 trillion, and fiscal '21 operating income is expected to increase JPY 28 billion compared to our previous forecast to JPY 190 billion. The previous fiscal year's operating income included onetime gains of JPY 13.2 billion, mainly from the transfer of equity stakes and the historic blockbuster hit Demon Slayer. Nevertheless, we expect operating income this fiscal year to exceed that of last fiscal year because of the strong current momentum. Streaming revenue, which is the largest growth driver in this business grew considerably due to strong paid streaming and the recovery in advertising-supported streaming, which was negatively impacted by the COVID-19 pandemic. During the quarter, streaming revenue increased significantly 53% year-on-year in Recorded Music and 70% year-on-year in Music Publishing. We are steadily improving our ability to generate hits by discovering and nurturing new artists. In this quarter as well, we had an average of 36 songs in Spotify's global top 100 songs ranking, and debut songs from our new artists are increasing in this hit ranking. In the area of strategic investment, we completed the acquisition of the DIY Artist Service business, AWAL, in May. This acquisition will strategically complement The Orchard in the growing indie market, enabling us to provide service to artists in various stages of their careers. In June, we announced the acquisition of Somethin' Else, a major British podcast production company, and Alamo Records, a music label focused on hip hop in the U.S. In July, we announced an alliance with the rapidly growing online game platform, Roblox. The alliance provides our artists the opportunity to connect with the Roblox community through virtual events and other means, creating revenue-generating opportunities that go beyond music. Through proactive strategic investments and partnerships such as these, we aim to further grow our business and generate higher profitability than our competitors. Next is the Pictures segment. FY '21 Q1 sales increased 17% year-on-year to JPY 204.7 billion, mainly due to an increase in sales of Media Networks and Motion Pictures, partially offset by a decrease in sales of television productions. Operating income decreased JPY 1.7 billion year-on-year to JPY 25.4 billion, mainly due to the decrease in sales and increase in production costs for television productions. Fiscal '21 sales are expected to decrease JPY 20 billion compared to our previous forecast to JPY 1.120 trillion, primarily due to the later than originally anticipated theatrical release of Motion Pictures product and deliveries of TV programming product. Fiscal '21 operating income is expected to increase JPY 7 billion compared to our previous forecast to JPY 90 billion, mainly due to an increase in licensing revenue, partially offset by the impact of the decrease in sales. In Motion Pictures, while U.S. box office revenue has recovered to about 40% to 50% of what it was prior to COVID-19, it remains uncertain when the situation will return to normal due to a resurgence of COVID-19. Given these circumstances, we are taking a flexible approach to our release strategy for films that are ready to be introduced to the market so as to maximize the long-term value of those works. For example, we decided to further postpone the theatrical release of major films like Venom and Hotel Transylvania: Transformania, while deciding to license to video streaming services the films Cinderella and Vivo, which were originally scheduled for theatrical release. Meanwhile, demand for content from video streaming services remains strong, and the increase in licensing revenue from new releases and catalog products has exceeded the decrease in revenue caused by the lack of major theatrical releases in the previous fiscal year. In Media Networks, our video direct-to-consumer services are increasing their customer base significantly with paid subscribers since June 2020, increasing approximately 80% at our anime DTC service animation and approximately 700% at SonyLIV, our video DTC service in India. Pure Flix, which we acquired last fiscal year, has also increased its paying subscribers quickly, reaching numbers today that we thought at the time of acquisition would take another year to achieve. Next is the Electronics Products & Solutions segment. Mainly due to an increase in unit sales of televisions and digital cameras as well as the impact of foreign exchange rates, sales for the quarter increased significantly to JPY 576.3 billion, a 59% increase compared to the same quarter of the previous fiscal year, which was severely and negatively impacted by COVID-19. Operating income increased a significant JPY 80.6 billion to JPY 71.8 billion year-on-year, primarily due to the benefit of the increase in sales and an improvement in the product mix. Fiscal '21 sales are expected to increase JPY 60 billion compared to the previous forecast to JPY 2.320 trillion, and operating income is expected to increase JPY 22 billion to JPY 170 billion to reflect the results of fiscal '21 first quarter. In the TV business, the market for high-end value-added large screen products remains strong. However, we are beginning to see a decline in the stay-at-home demand that has continued since last fiscal year in the market for low-priced small and medium-sized products. While the supply of TV panels is tight, we have maintained prices and shifted our focus to higher value-added models, resulting in an average selling price rising a significant 38% year-on-year. In the digital camera business, which suffered a significant contraction in demand around the world due to COVID-19, sales were strong because of recoveries in demand and a shift in the market to high-performance and high-spec products as well as strong product competitiveness. At the same time, the recent resurgence of COVID-19 in Southeast Asia has caused governments to place restrictions on personal and corporate activity, and we have had to reduce our operations at our factories in Malaysia from the end of May. There's a risk that certain parts of our component supply chain could also be negatively impacted. The fiscal year '21 forecast incorporates this emerging supply side risk as well as demand side risks such as lower stay-at-home demand from the second half of the fiscal year. Next is the Imaging & Sensing Solutions. Fiscal '21 first quarter sales increased 6% year-on-year to JPY 218.1 billion, and operating income increased JPY 4.3 billion year-on-year to JPY 30.5 billion. Fiscal year '21 sales are expected to decrease JPY 30 billion compared to our previous forecast to JPY 1.100 trillion, but our operating income forecast remains unchanged from the previous forecast. In the mobile sensor business, shipments to Chinese manufacturers have slowed since May, primarily due to the stagnation of the Chinese smartphone market and inventory adjustments. However, since we have incorporated this level of demand to some extent into our forecast, we recorded sales and profits for the quarter that was essentially in line with our expectations. We were able to offset the year-on-year decrease in shipments to a certain Chinese customer and generate overall segment sales and profits that exceeded the same quarter of the previous fiscal year because of a steady increase in shipments to a major non-Chinese customer and the recovering demand for image sensors for additional cameras. Regarding the efforts we have made to expand our customer base, adoption of our image sensors by Chinese smartphone manufacturers is progressing smoothly, and we have made strides in recovering our market share on a volume basis so far this fiscal year. In addition, we have gotten off to a good start when it comes to getting high value-added image sensors designed into our flagship models that many smartphone manufacturers plan to launch in the first half of 2022. On the other hand, we are concerned about the high-end smartphone market in China, which is lacking momentum because there are no significant hit products like those sold in 2019 and 2020 by the Chinese manufacturer, as previously mentioned. Since the situation could impact the speed at which our mobile sensor business profitability is expected to recover from the next fiscal year, we are monitoring the situation as well as the recovery of the Chinese smartphone market in the short term. Lastly, the Financial Services segment. Fiscal '21 first quarter Financial Services revenue decreased 6% year-on-year to JPY 414.4 billion, primarily due to a decrease in net gains on investments in a separate account at Sony Life Insurance Company Limited. Operating income decreased JPY 12 billion year-on-year to JPY 24 billion, mainly due to the impact of a onetime loss recorded at a consolidated subsidiary of Sony Life. As was announced today by Sony Life, in May of this year, we discovered an unauthorized withdrawal of approximately JPY 70 billion out of the bank account in the name of SA Reinsurance Limited, an overseas consolidated subsidiary of Sony Life. As a result, we recorded a loss equal to the amount of the withdrawal in the first quarter. After making this discovery, Sony Life immediately took action, including reporting the matter to the relevant authorities and continues to work with authorities investigating the matter to recover the funds and gain a full accounting of what occurred. We sincerely apologize for causing concern, but this matter has no impact on the insurance contracts that the customers of Sony Life have entered into. Our fiscal year '21 forecast for Financial Services revenue remains unchanged from the previous forecast. Operating income is expected to decrease JPY 17 billion compared to the previous forecast of JPY 153 billion. At the IR Day held in May, we explained our strategy to maximize the value of the Financial Services business and the strength in group management to sustainably grow the business in a profitable way. To demonstrate progress in line with the strategy from this earnings announcement, we have decided to disclose two important indicators for assessing the covered value of Sony Life: Market Consistent Embedded Value, MCEV; and new policy value in our supplemental information document every quarter. We also increased the dividend that the Financial Services business paid at the end of the previous fiscal year by JPY 20 per share to JPY 90 per share. The business is expected to make additional contributions to the Sony Group through stable dividend increases. This concludes my remarks. Thank you.

Okada, Emcee

That was Hiroki Totoki, Executive Deputy President and CFO. Now at 4:25 p.m. Japan time, there will be a session with the media. Then there will be a question-and-answer session with investors and analysts at 4:50 p.m. The duration of the Q&A session will be 20 minutes each. If you have signed up in advance, please call into the number that has been designated in advance. If you have not signed up in advance, you'll be able to listen to the Q&A session over the webcast. So please wait until we start the Q&A session. Thank you. Ladies and gentlemen, we'll be starting our Q&A session with the media now. So please wait for a short while before we start. Thank you for waiting. We would like to begin the Q&A session with the journalists. Responses will be provided by Executive Deputy President and CFO, Hiroki Totoki; Senior Executive Vice President in charge of Communications, Shiro Kambe; and Senior Vice President in charge of Corporate Planning, Control, Finance, and IR, Naomi Matsuoka. Now I'd like to start the Q&A session.

Inomata, NHK Reporter

I hope you can hear me. I am Inomata from NHK. I have two questions regarding the shortage of semiconductors. First, regarding PlayStation 5 and Electronics which are performing favorably, what is the current impact of the shortage of semiconductors? What do you expect going forward? Secondly, once again, about the semiconductor shortage; I've heard about Taiwan TSMC possibly building a factory in Japan. Can you comment on this TSMC issue?

Hiroki Totoki, Executive Deputy President and CFO

Thank you for the question. The first question was regarding the impact of the shortage of semiconductors, and the second was about the media reports concerning TSMC and our potential partnership with them when they build a factory in Japan. The shortage of semiconductors is impacting various areas. Through various measures, we have been taking some actions. For PS5 this year, the number of units to be sold has been set, and we have secured the necessary chips to achieve that target. Regarding the supply of semiconductors, we're not concerned at this moment. For the Consumer Electronics segment, we do use a lot of semiconductors in various areas, so availability of parts and components is a source of concern. However, we do have access to secondary sources and have maintained strategic inventories. We have taken various measures to ensure that production and sales will not be impeded. For now, we have been able to control the situation. But going forward, we cannot remain complacent. We would like to have access to good information to continue to produce and sell our products smoothly. Regarding the media reports you mentioned, there is currently nothing that we can say about this. However, as mentioned by Mr. Yoshida, the CEO, in the past, the logic chip supply is critical for the Japanese industry as a whole. To maintain international competitiveness, logic chips are very critical. That is the end of my response. Thank you.

Ban, Nikkei Newspaper Reporter

Ban-san from Nikkei Newspaper. Are you there? Hello?

Hiroki Totoki, Executive Deputy President and CFO

Yes, we hear you. Please go ahead. Are you still there? Do you hear us?

Okada, Emcee

I'm sorry. Since the line has been disrupted and disconnected, we would like to proceed to the next person. From Financial Times, please go ahead.

Inagaki, Financial Times Reporter

Do you hear me?

Hiroki Totoki, Executive Deputy President and CFO

Yes, we hear you.

Inagaki, Financial Times Reporter

From Financial Times, my name is Inagaki. I would like to ask you about your camera business. This is not directly related to the financial results, but from the Tokyo Olympics and Paralympics games, mirrorless cameras of Sony are being used more widely. From the consumer market to the professional mirrorless market, what is your evaluation on this?

Hiroki Totoki, Executive Deputy President and CFO

Thank you very much for your question about the camera business. Unfortunately, due to sponsorship matters, we are not allowed to speak on anything related to the ongoing sports events. Regarding the camera business itself, last year, because of the pandemic, people were staying home and lacked shooting opportunities, which made it difficult. However, it seems that the situation is improving. This fiscal year, the business is going smoothly, and going forward, this trend is expected to continue. As a general rule, Alpha's professional market share is increasing and improving. Thank you very much.

Nishida, Freelance Reporter

I hope I'm being heard clearly. I have two questions, please. The first question is about the game business. You stated that there has been some deterioration of the profitability of the hardware. Are you saying that the hardware contribution to profitability is yet to happen, or is it more about the balance between the software and the hardware? Can you elaborate a little more? The second question is on the electronics camera. You've stated this in brief. Things are doing very well. It's a good business. For the camera electronics, do you think that you have reached a point where cameras can continue to contribute to your earnings, or will it take a little more time before it can be a true contributor to your earnings?

Hiroki Totoki, Executive Deputy President and CFO

Thank you. The first question is about the game business and the deterioration of profitability of the hardware. I meant that hardware, this is in comparison with the PS4. The PS5 profitability in April, we focused on this period, and the assumption of the forecast remains unchanged. Things are progressing as we have planned and are going smoothly. Regarding the overall electronics business, we have improved our structure, and we have implemented many structural reforms. Through such efforts, I believe we have a robust management approach. Of course, it is subject to demand changes, and we must take additional actions to withstand those changes. However, I believe they will continue to contribute to our earnings. They have improved their business to be genuine contributors. Thank you.

Masuda, Nikkei Reporter

I hope you can hear me. I have the first question related to an earlier inquiry. This year, the stay-at-home demand for gaming has declined, but electronics and music are performing favorably. You have upwardly revised the projections. In various segments, some say they should be sold off, but your structure seems very resilient to changes. How do you assess your transformation efforts? My second question relates to PS5. Currently, the number of units sold and the number of active users on a monthly basis appear to be declining slightly. While you're aiming for long-term growth, how do you assess the current situation?

Hiroki Totoki, Executive Deputy President and CFO

Thank you for your questions. The first one was about our diverse businesses and their resilience, assessing the results of the transformation or restructuring of our company. The second question was related to the gaming business and the decline in monthly active users. Regarding your first question, while we have undergone restructuring, we also have many different game titles. Each of the businesses has managed to transform their structure and improve the strength of their businesses, which I see as a major achievement. Corporate management capabilities have increased. There were both positive and negative aspects, but each business has managed to respond to the situations to create long-term growth strategies. About the game business, yes, it's true that on a quarterly basis, fiscal 2020 first quarter had the most significant impact from stay-at-home demand. If you compare it with that, it seems there's a decline. However, if you compare it with fiscal 2019, as I mentioned in my speech, there is an increase over two years ago. Therefore, I think on the long term, there is a growing trend, and this growth is here to stay. We will continue to provide better services and experiences to our users to capture additional opportunities for growth.

Sadahiko Hayakawa, IR Officer

We are about to begin the session for investors and analysts. I am Hayakawa, in charge of IR. From Sony, I welcome Mr. Totoki, the CFO; Ms. Naomi Matsuoka, the Senior Vice President in charge of Corporate Planning and Control Finance and IR; and Mr. Hirotoshi Korenaga, the Senior Vice President in charge of Accounting, who will answer your questions.

Ayada, JPMorgan Analyst

I have two questions. The first question is about EP&S evaluation for the first quarter. The average selling price must have gone up, and I would like to know factors that contributed to this rise. Additionally, what are the potential or the probability of prices going up in the second quarter? The second question is on I&SS, specifically regarding the capacity of the first quarter and your prospects for the second quarter.

Hiroki Totoki, Executive Deputy President and CFO

Thank you very much for your questions. Your first question is about the assessment evaluation of EP&S. Regarding the ASPs—indeed, they are rising. It is difficult to break down how much of this is due to improved product mix versus supply and demand situation specifically. For TV, both factors were in play, particularly promoting high-end screen TVs. Beginning of the first quarter, the market for 32 inches and smaller has been declining. So, in that context, our product mix plan was correct. For cameras, we too have a strong product mix. Unlike last year, which was severely affected by the COVID-19 pandemic, countries have come far in vaccination, and the market, particularly the mirrorless full-size camera market, is recovering. For the market inventory concerning cameras and TVs, we currently have no issues warranting concerns. We will closely monitor panel price changes toward the end of this fiscal year as factors will be key for handling the situation. For I&SS, the first-quarter capacity was 130,000 per month; however, due to changes in mobile mix, a decline from an expected 141,000 occurred. For the second half, we expect this figure to be 138,000 per month. For the first quarter average was 137,000, which works at capacity as we have projected. We are shipping for new models to increase capacity utilization. While there was a 10% decline compared to last fiscal year, we are addressing this. Thank you.

Nakane, Mizuho Securities Analyst

Nakane speaking. I have two questions. Number one, the operating income has been revised. With respect to Music and Pictures and EP&S, could you provide rough estimates for revisions in each segment comparing first quarter vs projections for the rest of the year? My second question is about macro views. Regarding demand environment in North America and China until the end of this year, how do you perceive it for electronics, sensors, games, and music? Please share your thoughts on macro perspectives.

Hiroki Totoki, Executive Deputy President and CFO

Thank you for your question. So for your first question regarding the revision of operating income excluding Financial Services, let's discuss the performances based on segments. In the first quarter, especially for EP&S, actual performance was very strong, which boosted expectations significantly. However, there is a note of caution for the second half regarding TV demand versus the resurgence of COVID-19, which could impact production and supply chain. We incorporated those uncertainties into projections. For Music, the first quarter performed very strongly due to favorable streaming services. The advertising market is recovering, leading to better projections for ad-supported streaming. As for Pictures, we've modified our year-round projections based on current knowledge. Now for the demand situation in North America and China, while things are currently favorable, my concern is that the resurgence of COVID-19 may impact overall willingness to engage in various activities. Theatrical releases in particular face challenges, especially for family-friendly films. In China, while circumstances are relatively stable, recent regulatory restrictions for major businesses could hinder performance trends.

Katsura, SMBC Nikko Securities Analyst

Can you hear me?

Hiroki Totoki, Executive Deputy President and CFO

Yes, we can hear you.

Katsura, SMBC Nikko Securities Analyst

Two questions from me. The first relates to previous inquiries regarding regulations on Chinese platforms affecting mobile games. What effect can regulations have on the wider entertainment business? The second pertains to the upward revision of operating income, which seems contradictory amidst uncertainties. Could you elaborate on the reasons behind this decision?

Hiroki Totoki, Executive Deputy President and CFO

Thank you for your questions. The impact of regulations on Chinese platforms typically leads to cyclic adjustments. For us, our reliance on China sales is manageable relative to the overall picture. We need to reactively address these regulations considering their past cyclical nature. We're maintaining our longer-term investment outlook with minimal risks to management. Regarding operating income revisions, various segments saw sales that were revised significantly upward based on the first quarter's results but also modulated given various uncertainties. We are carefully weighing risks and opportunities when adjusting forecasts. Thank you.

Ono, Morgan Stanley Analyst

You mentioned in supplementary information that the monthly active user count is 104 million, a down from 109 million in Q4. Although there was an explanation regarding seasonality, how does this figure fit into your broader projections of 1.6 million users and is this decline concerning?

Hiroki Totoki, Executive Deputy President and CFO

Thank you for your question. While 104 million is indeed not a strong figure, we do not view this as an outright declining trend. We’ll analyze the elements continuously; we don’t see any alarming patterns thus far. Last year’s stay-at-home demand was unique, creating significant demand that is less prevalent now. However, if you correlate it with fiscal 2019, we expect the trend to remain positive. We will proceed with steps to engage users and enhance our platform experiences. Consequently, in this fiscal year, we will focus our efforts on business support. Thank you.

Hayakawa, IR Officer

Thank you very much. The time has come to close this session. We would like to conclude the earnings announcement for Sony. Thank you very much for your participation.