adidas AG (ADS) Q2 2026 Earnings Call Transcript

Hello, everyone. Good evening, good afternoon, and good morning, wherever you're joining us today. Welcome to our Q2 2026 results conference call. Our presenters today are our CEO, Björn Golden, and our CFO, Harm Allmayer. Before Björn and Harm will take you through the key developments of the second quarter and share... So before Björn and Harm will take you through the key developments of the second quarter and share their expectations, Let me just quickly remind you that you limit your initial questions to two during the Q&A session to allow as many people as possible to ask their questions. And now, without any further ado, over to you, Björn.

Thanks, Seb, and hello, everybody. Yeah, you have seen our announcement. We have seen the reaction. I'm sure we will have a lot of interesting questions. But before we go into the update of the business, you have also seen the other announcement. that says that Harm, that decided not to extend his contract when it goes out in March 28th, have now announced that he will leave and that we have found, you know, a successor together in Birgit. And I think before I go into that in detail, I think I can hand over to you, Harm, so you can say a couple of words.

Yeah, thank you Bjorn and yeah, of course it's one of our jobs as leaders to find a good successor and I'm very, very pleased that we have found Birgit and I'm even more pleased that I'm in the – it will be a smooth transition because I know we're very well and then secondly we're handing over a very, very healthy business to her. So I'm really, really pleased with that, you know, transition. Of course, you know, I'm also very privileged to talk about, you know, 29 years with the brand and 10 years of serving as the CFO. That has been a privilege. I always joke that my kids who are 27, 25 don't know anything else but Adidas. That has to change at some stage. But, again, I'm very, very pleased with the support that I got from the board, from many of you over the last, you know, 10 years. And, of course, I will be around, you know, for another quarter or a bit longer. until the end so stay tuned for that one and of course the timing is always something you decide like any athlete does as well and as we have said when you're not going to extend your contract you start thinking about what is the right timing and i believe you know handing over a well run company now of course you can always get better but it feels very very good and having the right success so it feels even better so i'm really looking forward to the next you know couple of months and And then I'm very, you know, respectful for the time afterwards, but I'm also looking forward to that. So stay tuned.

Thanks, Harmon. I think also from my side, I'm sure we will talk about this later, but when I came on board, one of the requirements for me was that you would stay. So I had a guy I knew and I could trust so we could start the process of bringing the company back again. So for now, also thank you, and I'm sure we will talk more about that later. And in that process of finding success, we had then the luck, to be honest, to find Birgit, who spent 25 years with the company earlier, then left to learn retail, being the CFO of CNA, and when she then had the chance to become available, we took the chance, and that is then the timing of this. Birgit will join us September 1st, and then stay, you know, in the board. harm will be the CFO until the end of the year and they will then work together to make a smooth transition so very very happy I think she knows the company she knows the industry and again now having worked for the world close that and move into the business update to celebrate also in your eyes a little bit of visibility in that I know about soccer and nothing I know about football It was a great tournament and especially for us and me probably like you feel I'm a soccer expert and I summarized the tournament as follows France had the best players Spain had the best team Argentina, the best attitude, playing for the flag, the country, and for Messi. But then the most fun team will create pleasure to see my countrymen not only performing, but also being extreme. And I can tell you, it shows you how much impact the World Cup Tournament has at home. I don't think Norwegians have been in such a good mood as long as I've been on this planet. So, it's good to add, again, Spain winning the tournament had a fantastic relationship the day after the tournament when they celebrated their bus was branded only with us and the team and many, many of the players, of course, and our sports, by far, the most successful one in soccer in general by male, female. I am also, as I wrote in my quote, extremely proud what the team has campaigns, planning the activations. I think I said, I believe even Adidas would have been proud of what has ever happened in this industry. By the playing, which again is far, far more in the commentary that I think there is some misunderstandings on how a World Curb Saves is being done. You have to remember that we started selling in 1.5 to 1.5 campaigns for the brand, a lot of activations around the word campaign, you know, the engagement. I'm proud that I hope you won wider stripes on the home and the narrowest stripes and the referee that's the halftime and opening show everybody that was involved felt very much had more than a, and we had big markets and again, you know how it happened, tried as quickly as ever had America, some more details on the financials.

And I want to start, as always, with the top line. As Bjorn already said, 40% current financial growth has been not just a record quarter from a top line point of view, but also has been a record first half. And in addition to that, we also had the highest retail sales ever in a quarter. So all of these accredited the teams that created the product and executed on the sales I'd like to go a little deeper on this one and have a little bridge. I want to go on the right-hand side, starting from the bottom to the top. Of course, we had U.S. tariffs already last year in the second quarter, but this year a little bit higher, you know, giving the full impact of it. There's some mixed effect on the sourcing cost and a little bit on freight, and I'm just really saying a little bit on freight because it's linked to the war surcharge if we get into the Middle East. And then when it comes to FX, it's actually neutral. You might be surprised, but there's benefits on the U.S. dollar. as we hedged on this one, but there are also other currencies like the Korean Wall, the Japanese Yen, Argentinian Peso, Turkish Lira, whatever, and these countries are, you know, meanwhile pretty significant, so it's eating up the benefits of the dollar, so it's fairly neutral. We had a small amount of U.S. tariffs refund, I know there are different phases, we only have recognized the first phase, we got some cash returned already, It has been a small amount and we will talk later about the remaining phases that you saw in the notes already. That's probably something in the second half that we haven't recognized in the second quarter in the amount of 250 to 300 million U.S. dollar that we still would expect to come to us at some stage. The biggest piece that is actually moving the gross amount in the second quarter was very disciplined, you know, pricing, very disciplined on promotions and of course when you're growing 27% in e-commerce and 23% in retail, it has a positive channel mix as So the upper two are actually the moving part of the 51.7 to 50, and the 2.5. So very well done and very happy with the D2C growth that we have seen. Of course, what you're interested in is the increase in the marketing and POS expenses and the operating overheads, so with the 30% growth in marketing and the 12% operating overheads. I want to immediately go a little deeper. Even so, we have some leverage on the operating overheads overall, but I want to explain that step by step, starting with the marketing. Of course, in marketing, we always said we want to make the World Cup not just winning it commercially, which we no doubt did with the teams that we had and the two teams at the final, but we also wanted to make sure that we used that platform to win as a brand. And that's why we invested significantly, more than $200 million, the exact amount is actually $212 million as Bjorn said, and yes, we indicated around $150 million earlier we want to invest, but it has been so successful, two teams in the final, having the ball, having sell-out records in North America and Latin America, so we decided then short-term to invest even more to pave the opportunity for the future. Secondly, yes, with growth in e-commerce of 27% and growth in retail 23%, there's a lot of variable cost in D2C, especially in e-commerce, there's platform fees, there's trade cost to the consumer, there's customer service fees. When you're growing that much, you might even pay a little bit more on customer service. This is what we see in e-commerce, there's a lot of variable fees and, of course, in retail, we leverage much more, but we also build up some pop-up stores. We also had extra staffing in the DCs. We had a lot of things that we did in order to fulfill the needs of the consumers and kept investing into this one. And rest assured, maybe we could have, you know, said that earlier, but very clearly in the second half, you will see a normalized marketing spent and on the full year, you should, you know, calculate in your spare sheets around the 12% and you will see a much lower growth in Q3 and Q4 in the operating overheads and was really related to the D2C growth in the second quarter. And again, I take it on me that I could have probably explained that earlier. That's definitely learning on my side. Let me go further down the P&L. I talked about the operating profit already. Still 8.5% operating profit with the 574 million, 5% up. And again, it's primarily as the gross margin is compensated for the operating overhead increase in D2C, it's primarily attributed to the marketing where we have been opportunistic to spend and potentially overspend on the event. When we go further down the line, no surprises on the financial expenses or the income taxes. Income taxes are around 25%, similar to Q1, which leads to net income growth that is similar to the operating profit growth, operating profit 5%, net income, the 6%. So far to the P&L, very happy where we are, very happy what we've achieved in Q2 but also in the first half, which leads to the balance sheet and I want to start with inventories again, current's neutral up, you know, 12%, but I want to immediately go into the details of that. Again, I said on the last call, we will be around the same as end of Q1. We came in a little higher. Well, some of that is linked to the Middle East where we are not selling through as much as we would have wished, you know, counted, you know, a double-digit amount there and of course some FX plays into the absolute amount as well. But the most important point for me is that the composition of that inventory and 90% of that inventory is current or future seasons or goods in transit as we have it on the boat and only 9% is previous seasons and that is not even enough to clear our factory outlets And our planned buy for the factory outlets globally is north of 50%, so it gives an indication the inventory is very, very healthy and I have no concerns for the second half. Secondly, it comes to accounts receivables, they are slightly up at 30%, a little bit higher than what you have seen on the wholesale growth and some timing effects in there. We, of course, work with some of our partners as well to make sure we support them in the right way during the World Cup, but that is also something that you will see coming down the third quarter as we're collecting post-World Cup. Payments have normalized, and of course, operating working capital is slightly up compared to inventories and accounts receivable as you combine these two. Talking about operating working capital, of course, that direction doesn't look good, but as you know, we invested into holding the inventory and receivables for the World Cup. It was the right decision to win this one commercially, and our guidance is 22 to 23%, and there's no reason to not believe that we get to that guidance until the end of the year, and you can hold me personally accountable for it, that we get to that guidance of 22 to 23%, so also that is going the right direction. To sum it all up, you see it also on the cash and cash equivalents, despite, you know, doing a share buyback of 500 million the first tranche and then already 250 million on the second tranche and paying a dividend of 500 million. We add it to our cash and we are almost at 1.2 billion. Also that is something where we made tremendous improvement in the first half compared to last year and there's more to come so I'm very optimistic from a cash flow generation point of view. There's another 1.2 to 1.3 billion cash flow coming in the second half and will help us to finish on a very strong cash balance for the end of the year. Talk about the share buyback as a dividend. You know, $500 million has been done in the first tranche. We already did $250 million, around $250 million in the second tranche, with $1,380,000 shares being bought back. So together with the dividend, we will return to shareholders. Shareholders are around $1.5 billion this year. And you all know we could not have done that without being in such a healthy situation as a company. So, very, very happy where we are. You also see that with the cash and cash equivalents, how it's developing, despite the share-by-week and also the adjusted net borrowings, we are finally going the right direction again, moving from 5.5 to 5.2 billion. And what's important for, you know, S&P and Moody's that also leverage ratio is consistently remaining below our policy of 2.0, so we are actually improving from 1.7 to 1.6. So also there, we are very diligent on how we're using our cash and how we return to shareholders and we are feeling very good about the second half. With that, talking about the second half, back to Vir.

Thanks, Harm. Yeah, you've seen this slide many times. When we started three and a half years ago, we had some issues and we said that we needed that time to go through the process and that in 26, we will then be a healthy and successful company. And, you know, we can always do better, but we hope that we have delivered what we told you and feel that the platform for this company is actually in great shape. The ambition, again, for each market should be the number one in the market. Of course, they will not all achieve it, but at least we're having a discussion what is necessary in the different markets, and it shouldn't be a surprise that outside of the U.S., we are starting to actually be number one in many markets. In the U.S., I've said many times it would be unrealistic knowing how far behind we are and that we have many, many years that we need to invest to kind of be competitive with the leader, but we still believe that we have plans, investments, and resources then to double our business, and I think you saw growing 15%, 70%. We are on the way also to get closer to that. The business model that we talk about, you've seen many times too, to be a global brand with a local mindset i hope you facilitate for innovation concept that we then need a network in new york any changes have the right culture it should also not be a surprise that then we locally need a footprint in product and activations the left side we have journey that we probably should have done a long time ago but that we have started and jonah and his team very aggressive that side korea when it gets to the thing who's a cricket player that we then in India using style collection, and in China, which is on fire, even above everything. That's why at any point in time around the world, there might be different activations that turn into lifestyle or local, and again, in a market that is not relevant, we have found the recipe in the market.

Coming out of the World Cup, you might say, so what is happening now?

Well, right now in soccer, we're launching all the clubs. I think it has to do with our product at the time being. also very in the women's training area you have seen that many brands have had collections that have been either brand and decided to do on the find with her in mind actual fabric in interest but all about hyper boost which we started in comfort running we are into lifestyle so on the fashion side we have a great being for her very unique business side and on the lifestyle side we feel the growth. You will have a new RDZero Pro 5 coming for the other world record. Anthony Edwards. When you look at the guidance you know we started with high single digits. I'm sure in your spreadsheet our wholesale trend that it will be higher and then of course high probability that we haven't booked it. 728 we should as a company the right one AI to help us on this. And then just to finalize we have 728 margin again under the third.

Yeah thanks very much Bjorn. Maura, we are now ready to take questions.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. In the interest of time, please limit yourself to two questions. Anyone who has a question may press star and one. The first question comes from the line of Grace Smalley from Morgan Stanley. Please go ahead.

Hi, good afternoon. Thank you. My first question will be on the footwear business. If you could just go into further detail on what you're seeing in lifestyle footwear and how we should think about the outlook for the lifestyle footwear into the second half of this year and into 2027. and when you look at the total footwear business would you expect it to continue to decelerate from here and could it potentially turn negative into the second half or do you actually expect the business to improve from here as hopefully the kind of competitive dynamic changes and then my second question would just be on the US very clear that you executed very well in the World Cup in the second quarter Beyond sort of the short-term benefit from the World Cup, how are you thinking about the long-term impact and whether you've been able to use this event really as a catalyst to gain lasting consumers, but also, I guess, lasting shelf space with your U.S. retail partners as well? Thank you very much.

They are good questions. I do think when you do your store checks, you will see that the lifestyle footwear, especially for him, is currently pretty heavily discounted. franchises. That means that I do think that if I look at our order book, when it gets to the end, have you increased and have a business that they've had before and that our local team has the OGs and have in the pipeline. But as you know, they are behind and have a lot of...

Thank you very much. Next question comes from the line of Josh Lowery from Rothschild & Co. Redburn. Please go ahead.

Yes, the sale through in our own town is higher than in our own, and it has been like that during.

Thank you very much.

The question comes from the line of Anisha Sherman from Bernstein Societe Generale. Please go ahead. Thank you so much.

I have two questions, please. One kind of following on the prior question around wholesale, you've talked about holding back wholesale growth while competitively being very promotional. As we're seeing some of those big promotional phases with these big retailers starting to wind down, you know, we've seen that in North America, we've seen that with some recent announcements in China, are you more optimistic about opening up wholesale selling, and does that help Q3 at all, or is that more Q4 into Q1? And then a second, you know, related to this, a second question around operating overheads. You're currently very DTC heavy, which, as you mentioned, is higher cost in terms of overheads. How important is that wholesale DTC balance for you to be able to meet your midterm goal of reaching sub-30% operating overheads? Thank you.

The second question is that should you only be DTC, then your margin is higher and your overhead is higher. then you know the 30% doesn't mean anything. So the 30% is based on a 60-40 split. So you have to remember that if you sell D2C, your margin is much higher, but then also your cost percentage is higher, but your average should also be higher. So we're not dependent on holding the 30 should the split go to a higher D2C part than the 40.

But again, I have to admit that there wasn't any goal to actually accelerate D2C, But it was that the bond that was, as we said before in the last six months, was very cautious.

And as you probably have seen yourself, you know, about China and competitors, that will not happen in the next month. It will have an impact. And since China is on fire, so we don't need any help there. Internally, what we can control is actually very happy. So that will actually change.

Thank you. Very clear.

The next question comes from the line of Jürgen Kolb from Kepler Chevrolet. Please go ahead.

Thanks very much indeed. Two ones, first one on China. In China, you reach a 27.6% EBIT margin in H1, if my calculation is correct here. So we're getting closer to the 30% again, or above 30%, what used to be the peak margin or the strong margin in China. Initially, I think in the past you indicated that you think high 20s could be possible, this is where we are right now, what do you think is still in China? How much margin potential do you see, given the fact that, obviously, your brand is on fire, you're adding a luxury component, one of the main competitors is making some strategic decisions which may open up possibilities. So maybe some words on China, if you have. And then secondly, the gross margin, obviously, in the second quarter was strong with all the puts and takes that affected the business, but led to a very strong gross profit margin and indication for a brand heat. What do you think is possible for the second half, but also maybe a first look into 2027 with your indications on hedging again and all the other impacting factors? Thanks very much.

Your calculation on China is correct, your land on fire is also correct. I would like to add that the diversity in the products that we have in China today is much stronger than when it peaked at 30. I think when you go back to those days, the best time brands were selling, I call it commodities with logos on, and you know that the margin on cotton, 20, as a margin you also have to remember in China with Chinese current at the same time because we're sourcing in China in the buy which then the markdowns and I can also say feeling in to do now is of course seeing that in China is unknown and how it happened. Of course margin I think I leave off to you.

Yeah Jürgen on the gross margin of course we are very happy what we have achieved in the first half and of course in the second quarter but there was a significant part on on D2C and the football business, the jerseys and full price, so we want to continue to be disciplined in the second half. And the puts and takes is, I mean, yes, there will be less D2C, there will be less football business, but on the other hand, what Bjorn just explained, maybe the promotion, you know, levels with some of our competitors will ease a little bit in the second half, that should be a benefit. And again, I'm not going to talk about the Middle East or whatsoever, that's hopefully under control. It's more important for the next year, for next year we are very clearly getting some tailwind from the US dollar and most importantly what we got forward to a little bit of a surprise is some of the currencies of Japanese yen, Korean yen, some of Argentinian peso and Turkish Many of these currencies have actually stabilized, you saw it on our top line development as well when it comes to reported and the currency neutral, so we are very optimistic that we get a full benefit of the tail end from the US dollar and not so much headwind from the other currencies going into next year. But that's an early indication, but definitely we would expect the margin going up the next year compared to whatever we deliver this year.

Very good. Thanks very much, guys.

Next question comes from the line of Wendy Liu from JP Morgan. Please go ahead.

Hi. Good afternoon. Thanks for taking my questions. I have two also. So, one is on marketing, and I appreciate that you invested a bit more taking opportunity from the World Cup. How do you evaluate the ROI from marketing investment? Has the investment in marketing translated to interest in Adidas more broadly and beyond the World Cup, and how do you track that? And then second question on lifestyle footwear, I was wondering, you know, if you have any, you know, if you reflect back on your strategy on Paris and on Superstar, what are your takeaways and how much of, you know, the perhaps very successful playbook with SEMBA can be replicated to Spanishness?

This question decided to prevent the World Cup was a platform for us to show the DNA of the brand, and it's not to show the brand only in the world and then into monetary environment.

It has actually worked also in other parts.

Upper funnel has actually helped us all. We have no measurements now after that. Our marketing people have done a great job. But remember, we style the higher end in limited price, and then we try both. is coming, doing very well. And then, you know, learning lifestyle around the jellyfish between with hyperbooster, why that was a...

Great, thank you. Next question comes from the line of Adam Cochrane from Deutsche Bank. Please go ahead.

Good afternoon, and just like I say, thanks for all your health harm over the last, well, not for me 20 years, but certainly for you that long. The questions, first of all, on the wholesale performance. I do understand that the sales being weaker into the channel maybe both in Q2 and into the second half. Just want to really confirm how much of this is Adidas' choice to limit the retailer demand for the products compared to retailers actually ordering less products. And within that, if you have taken the decision not to chase volume, especially in Europe, great for the full price sort of sell-through. But is there any risk that you lose the shelf space that you've worked so hard to regain with the retailers over the last couple of years? And then the second question is, your implied sales growth of around 6% does seem quite a slowdown from what you achieved in the first half, especially with some World Cup sales still to come through in the third quarter. It should probably be a couple of hundred million euros still coming through. And you talk about the recovery in footwear in the fourth quarter, inventory up 13%. So are you seeing anything with regards to a slowdown in current trading in July, either on DTC particularly or wholesale, that has made you more cautious on the outlook?

No. The answer to your last question, no. July was strong. That mirrors the wholesale business, and as you see, that was trending around 6%, and need to see to forecast that for the product that I don't think you have any retails in the world that forecast as double digit like for that growth. So, yes, holding back device, that's very, we decided to hold. Trying to get when you check with the different products in ourself than you guys are, and we apologize for that standing going out of queue. Another big question.

Thanks.

Question comes from the line of Andreas Riemann from Oddo BHF. Please go ahead.

Yes, good afternoon. The first topic in the World Cup again. So far it sounds like the remaining World Cup business in Q3 will be gross margin accretive or is there some World Cup product left that you have to discount now that certain teams didn't make it that far? Probably an easy one. And the second topic is oil. The high oil price now affects transport costs and later probably also input costs. So would you say it's unlikely that the sports brands can raise the prices in this environment so that it will hurt the brand's margins at one point, maybe in 27, or do you say oil is not as relevant as we all think?

I mean you're German, right? So I have to swear there might be inventory based on performance between the German inventory. I think all of the inventories compared to what we bought are fine, but then we all know and this is important to say that Germany is playing in the Nations League in September, October with a new coach, which happens to be our partner. So we will be pretty active in celebrating the German team also in the second half. So I don't think we will have a huge amount of inventory that will be dangerous for the margin. When it looks to the rest of the business in Q3, then I think Spain and Argentina are the two markets that will ask for new products. I know there's a difference between two stars and one stars and there are then developments around that. And then Argentina, of course, I think all other exceptions. As I said, the amount currently in Bayern Munich is much higher than we have today. That's bad when it gets to inbound because we have diversified pictures. I think the oil was around 90 more down. I think when you look at our margin, we have been pretty good or lucky,

depending on how you see it we have very good and if the German drug you get cheaper you can tell me Maura we have time for two more questions yes sir the next question comes from the land of Peralda Dania from RBC please go ahead

thank you good afternoon so my first question is on the guidance for 26 please I'm just wondering if we look at the 2.3 billion euros of targeted EBIT if you get incremental revenue contribution from DTC in the second half of the year, is there any drop-through to earnings from that, or there isn't any leverage from DTC sales given the higher run rate OPEX that's required to fulfill that? And just related to that, I'm just thinking, are we still on track to reach 10% margin by 27, which doesn't leave a lot of heavy lifting to do into next year from a margin perspective? And then just secondly, on Stan Smith, I think, Bjorn, you mentioned that this is a trend that you're seeing kind of building. Could you maybe give us a bit more indication about which regions or markets you're seeing that in and what your timings are around scaling this franchise into next year?

The e-com and concept, it depends on where it is, but I think we are in line to do, I'm not sure if you said I didn't catch it, and then when it gets to Stan Smith, our role Ironically, the higher end in the U.S. demand and the triple white thing, even triple white super, so I say, type of triple white look. Thank you.

Today's last question comes from the line of Warwick O'Keehan from B&T Paribas. Please go ahead.

Thanks very much. I just want to ask two questions that come back on topics we've already talked about. Bjorn, just to come back on wholesale, you said the second half is trending at six. exactly is it that you're seeing in footwear, is that the broader range getting traction or particular styles, and is there anything that's slowing to balance out that growth? And then if I may, one for harm on operating overheads, take your point about the – but actually DTC was pretty strong in Q1 as well, and the growth in cost was very – drops away in the second half to give you the control in H2P. um higher than mom coming in q4 and it's a combination of performance the pattern is also

if you apparel and given that the freshness is more apparel than footwear and that when we get to cool guide more open to buy again back to we have a momentum training um and then on the

lifestyle 27 you know the operating overhead yes i'm very confident that it will be different in q3 and q4 what is the reason for that first of all yes we had good growth in d2c in q1 as well, Warwick, but e-commerce was growing double the pace in Q2 versus Q1, and of course this is where we have more variable cost compared to retail. And on retail, it's really the one-time thing with pop-up stores in the US during the event. There's a lot of logistics and offering over a link to the World Cup that we invested just in Q2, event-related logistics, and again, staffing at retail stores to replenish every day twice and all these things. And then lastly, and we'll continue the second half, but just Q2 compared to Q1, also we do the salary increases starting in April, and that, of course, as a global company, that's something you feel Q2 versus Q1, but you don't see that, you know, whereas per year when it comes to Q3 or whatever, so it's normalized. So just rest assured, Q3 and Q4 will be normalized both from a marketing but also from an operating role point of view whatever the D2C growth will be and to the question earlier if D2C will be better we will make sure that it drops to the bottom line and will be effective in the guidance then.

Yeah, thanks very much Warwick. Thanks very much also Maura and thanks very much to Bjorn and Harm and of course thanks to all of you for participating in our call today. As always if you have any follow-up questions and I have the feeling that there may still be some Please feel free to reach out anytime to Adrian, Philip, Chiara or myself or any other member of the IR team. We very much look forward to speaking to you. And before we wrap up, I just want to send out a quick reminder that we look forward to hopefully welcoming many of you here to our Home of Innovation event on September 23 and 24. Bjorn mentioned it. We think, you know, if you come and look at the strong pipeline that we have for 27 and also 28, hopefully you will be able to better understand our confidence in our ability to continue to grow high single digit in 27 and deliver on our 10% margin target. If you haven't registered yet, there's still some time to do so. We will keep the registration off for a few more days and we would be very happy to be able to welcoming you here on our beautiful three stripes campus in the fall and with that thank you very much again for joining us today we wish you a wonderful summer great rest of the day and look forward to catching up with you bye-bye ladies and gentlemen the conference is now over thank you for choosing Coruscant and thank you for participating in the conference you may now disconnect your lines goodbye