Title

Presentation

PDD Holdings Inc. beats earnings expectations. Reported EPS is $17.32, expectations were $1.62.
PDD isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Ladies and gentlemen, thank you for standing by and welcome to PDD Holdings, Inc. Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your host today. Sir, please go ahead.

Unidentified Company Representative: Thank you, operator. Hello, everyone and thank you for joining us today. PDD Holdings earnings release was distributed earlier, available on our website at investor.pddholdings.com as well as through the GlobeNewswire services. Before we begin, we would like to refer you to our safe harbor statement in the earnings press release which applies to this call as well. We will make certain forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release which contains a reconciliation of non-GAAP measures to GAAP measures. Joining us today on the call are Mr. Chen Lei, our Chairman and Chief Executive Officer; Mr. Zhao Jiazhen, our Executive Director and Co-Chief Executive Officer; as well as Ms. Liu Jun, our VP of Finance.

Lei and Jiazhen will make some general remarks on our performance for the past quarter and our strategic focus. Jun will then walk us through our financial results for the fourth quarter and fiscal year ended December 31, 2023. During the Q&A session, Lei and Jiazhen will answer questions in Chinese and will help translate. Please kindly note that English translation is for reference only. In case of a discrepancy, statements in the original language should prevail. Now it’s my pleasure to introduce our Chairman and Co-Chief Executive Officer, Chen Lei. Lei, please go ahead.

Lei Chen: Hello, everyone. Thank you for joining our earnings call for the fourth quarter and fiscal year of 2023. 2023 was an important year for PDD Holding. We began a journey dedicated to high-quality development aligned with our strategy, we rolled out a series of initiatives to empower businesses and enhance consumer value. This effort has resonated well with our users and merchants burning their positive feedback [ph]. Driven by a rebounding consumer market, our total revenue in the fourth quarter was RMB88.9 billion which represents 123% year-on-year increase. GAAP net income for this quarter was RMB23.3 billion. Over the past year, our revenue was RMB247.6 billion which represents a 90% year-on-year increase. In 2023, amid a positive consumer sentiment, our platform saw a healthy resurgence.

In the fourth quarter, we focused on improving consumer well-being by making high core higher-quality products more accessible. This was achieved through a series of events such as a Double 11 and Double 12 shopping festival. Our goal has always been clear; to unlock unrealized consumer potential and empower individuals to retrieve higher quality of life. As a result of these efforts, we have seen sustained growth in consumer engagement in our platform throughout the fourth quarter. In 2024, we will continue to ramp up our support for high-quality supply and enhance our ability to deliver good value and excellent service. We will refine our supply chain insight and the technology capabilities to help manufacturers reduce costs increase efficiency and develop more product and resonate deeply with consumers.

Our support for a new generation of farmers and merchants skilled in both agriculture and e-commerce is unwavering. This is part of our ongoing effort to boost local employment and increased farmer’s income. Through our RMB10 billion ecosystem initiative, we grow alongside our high-quality merchants, brands and small to medium-size businesses to build a more sustainable ecosystem [ph] is at the core of our growth as a technology company. And last year, we continue to invest in technology innovation with R&D expense reaching RMB11 billion. This is the second consecutive year that our R&D expense has surprised RMB10 billion. In the fourth quarter, R&D expenses grew by 19% reaching RMB2.9 billion. This year, we continue to channel investments into new drivers of high-quality development.

We are dedicated to advancing the role of cutting-edge technology in agriculture and in manufacturing. In the fourth quarter, we reinforced our agriculture strategy through supporting projects such as the agricultural cloud initiative and Pinduoduo Academy growing competition. We hope to encourage the development of more resilient digital agriculture region to further revitalize rural community. [Indiscernible] growing competition as an example, it provides a platform for college students to showcase the agricultural innovation. Pinduoduo has been an active supporter for this event for the past year running and we also pay close attention to [indiscernible] of agriculture products driven by technology for instance, Pinduoduo art of support [ph] for specialty agriculture products through initiatives such as zero commission and program for agriculture producers such as orange and ring grain [ph] food sector.

We formed a strategic partnership with certain producers to broaden their market reach and provide continuous platform support. We also actively [indiscernible] possibility. In December last year, as earthquake struck [ph], we promptly donated RMB20 million. The donation [indiscernible] purchase of reduced prices and post-disaster restructuring. We set ourselves accountable for making positive contributions to our communities. As for our global operations, since launching in September 2022, we have expanded into 5 countries, 50 countries and regions. As a new craft [ph], we are excited to learn from our diverse global consumers and markets as we explore technology innovation. With our supply chain expertise, we are dedicated to helping each consumer live a more fruitfully life and we remain committed to this mission.

2023 remarks the eighth year since the founding of PDD Holdings. Since our inception, we have always stayed closely to our focus. We have always put consumers first and embrace innovation with an open mind. Throughout this journey, our team has experienced remarkable growth and development and we have seen ambitious young leaders emerge ready to take on greater responsibilities. Our companies drive on creativity and energy of the younger generation, giving us the confidence to create unique value for our growing consumer base. And now I will hand it over to our Co-CEO, Zhao Jiazhen, to further talk about our high-quality development strategy.

Jiazhen Zhao: Thank you, Lei and hello, everyone. This is Zhao Jiazhen. Thank you all for joining the fourth quarter and full year ’23 earnings call. 2023 is a year of recovery guided by the [indiscernible] of recovery, benefit and innovation, we proactively responded to consumption recovery policies by bringing together the supply of quality products and the demand of consumption upgrade. We played a part in releasing consumption potential. We achieved decent growth in 2023 which we believe is the combined result of our effective promotional activities and the overall recovery of consumption. [Indiscernible] is built to serve the needs of a vast and diverse consumer base. In recent years, through interactions with our users, we are observing a growing demand of consumption upgrades.

But at the same time, we also noticed that our consumers are looking at ways to upgrade in a more rational manner. Consumption upgrade is not about high consumption or overspending. It is more about owning our users better products and services at more accessible prices to bring more savings. Being this trend, we paid special attention broadening in selection of quality products sold on our platform and focus on promotional efforts on premium consumer goods, such as trending national brands, imported goods and high-quality products. For example, through our RMB10 billion program, we are making it increasingly easy to enjoy imported products and we are also investing firmly to support national brands. During the Singles Day last year, we helped our merchants sell more and our user SaveMor [ph], our flash cell channel acted as a growth engine for over 100,000 SME merchants.

And by the end of the event, more than 40 product categories, solid sales doubled. These included agricultural products, national branded products and quality imported goods. The number of merchants selling agriculture products and national branded goods that benefited from our RMB10 billion program more than doubled in our total growth worldwide channel dedicated to imported products, 21 out of the 100 brands achieved a year-on-year growth of over 300%. 59 items recorded daily sales of over RMB1 million during Singles Day [ph]. These numbers also show that the growth of our platform is the result of the value we create for our consumers and merchants. 2024 will be a year of consumption promotion guided by the principle of Consumer First, we will continue to improve the variety of products and services offered on our platform, being our value for money mind share, upgrade our shopping experience and enhance user activity.

And as a result, we will be able to offer more visibility and sales opportunities for quality merchants, thereby strengthening the positive feedback on our platform. 2023 proved to be a pivotal year for us as we embark on the journey towards high-quality development. And 2024 will be another critical year to implement this strategy to every part of our operations. We will step up our investments in the 3 key areas of high quality consumption, supply and platform ecosystem to further optimize our capabilities in offering more savings and better services. In terms of high-quality consumption, we will continue to put ourselves in consumers’ truths and adjust our product offerings following closely the changes in consumer demand with tailored promotional events, featuring holidays, seasons and special product categories, we will make it easier for consumers to fulfill their demand for high-quality products at attractive prices.

In addition to more savings, we’ll also continue to upgrade our services. We will roll out a series of initiatives that benefit consumers, strengthen consumer protection and further improve the shopping experience for remote areas and on the privileged groups. In terms of high-quality supply, since Q4, we have been allocating platform resources such as traffic support coupons to help manufacturing brands expand the inflows through a series of promotional activities such as dedicated live stream infections and the national goods festival, our merchants make great progress on our platform. The rise of national brands to industry-leading positions requires the joint efforts from both the brands and our platforms. This year, in partnership with new and established national brands, we will continue to explore new market opportunities and bring to our consumers better products and a high-quality shopping experience.

Agriculture is the foundation of Pinduoduo as the largest agriculture platform in China. In Q4, we continued our support for the Pinduoduo Academy growing competition. We also provided ongoing traffic support and other platform resources for agritech enabled products backed by participating teams. By doing so, our goal is to promote a real-world application of research findings and to accelerate the improvement in farming productivity. Last year, our agricultural cloud initiative went due to production regions in [indiscernible] bringing e-commerce training and one-on-one consultation to local agriculture merchants. This year, we will increase our investments in agriculture through projects such as the cloud agricultural cloud initiative and smart agriculture competition to continue to bring digitization solutions to local producers to improve the resilience and the competitiveness of the local supply chain, thereby supporting rural revitalization and increasing farmers’ income.

Building a high-quality platform ecosystem will remain our top priority this year through the RMB10 billion ecosystem initiative and platform governance policies, we will continue to foster an environment that encourages high-quality supply and services, advancing a green, healthy and modern platform ecosystem. Now let me hand over to Jun, she will provide you with an update on our financial performance.

Jun Liu: Thank you, Jiazhen. Hello, everyone. Now let me walk you through our financial performance in the fourth quarter and fiscal year ended December 31, 2023. [Indiscernible] income statement in Q4, our total revenues increased 123% year-over-year to RMB88.9 billion and 90% year-over-year to RMB247.6 billion for full year 2020. This was mainly driven by an increase in revenues from online marketing services and transaction services. Revenues from online marketing services and others were RMB48.7 billion this quarter up 57% compared to the same period of 2022. Our transaction services revenue this quarter were RMB40.2 billion, up 357% versus the same period of 2022. Moving on to costs and expenses. Our total cost of revenues increased 293% from RMB8.9 billion in Q4 2022 to RMB35.1 billion this quarter.

For the full year, our total coal ship revenues increased 192% to RMB91.7 billion, mainly due to increased fulfillment fees, payment processing fees, [indiscernible] and call center expenses. On a GAAP basis total operating expense for this quarter increased 44% to RMB31.4 billion from RMB21.8 billion in the same quarter of 2022. On a non-GAAP basis, our total operating expenses increased to RMB29.3 billion this quarter from RMB19.3 billion in Q4 2022. During the fourth quarter, we continue to focus on key areas critical to the high-quality development of our platform, such as investing in our more savings for our brands and our R&D capabilities. Our total non-GAAP operating expenses as a percentage of total revenues was 33% in Q4 compared to 48% same quarter 2022.

For full year 2023, total non-GAAP operating expenses were RMB90.3 billion up from RMB61 billion in 2022. Looking into specific expense items. Our non-GAAP sales and marketing expenses this quarter were RMB26.2 billion, up 53% versus the same quarter of 2022. During Q4, we stepped up our investment in series of year-end promotion wins to give up — to give back to consumers and increase in advertising to promote our brands. On a non-GAAP basis, our sales and marketing expenses as a percentage of our revenue this quarter was 30% versus 43% for the same quarter in 2022. For full year, non-GAAP sales and marketing expenses increased from RMB52.2 billion to RMB79.8 billion in 2023. Our non-GAAP G&A expenses were RMB674.5 million in Q4 versus RMB360.8 million in the second quarter of 2022.

Our annual non-GAAP G&A expenses were RMB1.8 billion, in 2023 versus RMB1 billion last year. Our research and development expenses were RMB2.4 billion in the fourth quarter on a non-GAAP basis and RMB2.9 billion on a GAAP basis. For full year 2023, our annual GAAP R&D expenses supposed RMB10 billion the second consecutive year. Technology is at the core of everything we do. We will continue to build on our R&D capabilities to promote tap adoption [ph] in agriculture and manufacturing sectors to improve supply chain efficiency, an intent of our consumers’ growing selection of quality products at attractive prices. On a GAAP basis, operating profit for the quarter was RMB22.4 billion versus RMB9.1 billion in the same quarter 2022. Non-GAAP operating profit was RMB24.6 billion versus RMB11.6 billion in the same quarter 2022.

Non-GAAP operating profit margin was 28% this quarter compared with 29% for the same quarter 2022. For the full year, nonoperating profit increased from RMB38.1 billion to RMB65.8 billion in 2023. Net income attributable to ordinary shareholders was RMB23.3 billion for the quarter and RMB60 billion for the full year. In the fourth quarter, base earnings per ADS was RMB17 and diluted earnings per ADS was RMB15.83 versus base earnings per ADS of RMB7.42 and diluted earnings per ADS of RMB6.52 in the second quarter of 2022. Non-GAAP net income attributable to ordinary shareholders was RMB25.5 billion for the quarter and RMB67.9 billion for the full year. In the fourth quarter, non-GAAP diluted earnings per ADS was RMB17.32 versus RMB8.34 in the same quarter of 2022.

Lei mentioned 2023 is the first year on our part towards high-quality development and we’re encouraged by the early results. Looking ahead, while we are excited about the new journey, there are challenges and uncertainties along the way. And we need to be prepared to invest decisively for the long-term value of our platforms. Our financial results may continue to fluctuate and past performance may not serve as a benchmark for future quarters. That completes the income statement. Now let me move over to cash flow. Our net cash flow generated from operating activities was RMB36.9 billion in Q4 and RMB94.2 billion for the full year of 2023 compared with RMB26 billion in the same quarter of 2022 and RMB48.5 billion in 2022. As of December 31, 2023, the company had RMB217.2 billion in cash, cash equivalents and short-term investments.

Thank you. This concludes my prepared remarks.

Unidentified Company Representative: Thank you, Jun. Next, we will move on to the Q&A session. Today’s Q&A session, Lei, Jiazhen and Jun will take questions from analysts. We could take a maximum of 2 questions from each analyst. Lei and Jiazhen will answer in Chinese and will help translate for convenience purposes. Operator, we are open for questions.

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Operator: [Operator Instructions] Your first question comes from Joyce Ju with Bank of America.

Joyce Ju: I have two questions today. Firstly, as management mentioned in the opening remarks, 2023 was a very important year for PDD from the strategic perspective. Looking back at the fourth quarter and the full year 2023, could the management share how you would evaluate your execution of the past year strategies? And how does the actual results are compared against the team’s original expectations. For 2024, will there be any like major change in your strategic focus. And my second question was actually about the fourth quarter promotions. We all know the fourth quarter is the peak season for the e-commerce platforms. How would management assess PDD’s performance in the fourth quarter shopping fasteners? Are there any interesting trends of consumers, merchants or platforms can be shared with us.

Also, could you also help us a little bit in terms of understanding the relationship between the promotional season, seasonality and your very strong fourth quarter results.

Lei Chen: This is Chen Lei. Let me take your question on strategy. As mentioned in our remarks, 2023 marks the beginning of our high-quality development strategy. After dedicated [ph] execution, we have seen positive outcomes on the construction side, supply side and within our platform ecosystem. This further reaffirms our lasting commitment in high-quality development. As we expanded into multiple countries and regions, we encountered diverse consumer habits, cultures and rapidly evolving market landscape. We firmly believe that the consumers’ demand for more savings and better services is universal. Therefore, in Q4, we continued our investment in alignment with our high-quality development strategy. First, from the consumer side, our top priority has always been to understand and meet consumer needs.

During the peak season in Q4, we introduced tailored promotional activities across different markets future innovative direct and engaging campaigns. These initiatives allow consumers to improve their quality of life with ease and grid savings, making it easier for our consumers to achieve high-quality consumption. The response to these promotions has been positive. On the supply side, we continue to allocate platform resources towards high-quality products and reputable merchants to offer consumers more quality products. In addition, we also have merchants drive volume, improve turnover efficiency, reduce operating costs, minimize product risk and consequently lower product prices, forming a virtuous cycle. Healthy ecosystem is the fundamental for the sustainable growth of the platform and we are determined to put more efforts in this area.

We continue to make forward-looking investments in platform governance employing technology to identify risk early and respond quickly. We carry out product screening and merchant review on issues such as ship guarding minus, IP protection and product compliance and achieved favorable outcome. Moving ahead, we will continue to take on social responsibilities, fostering a favorable environment for both consumers and merchants. After a year of execution, we are delighted to see the positive changes brought about by our high-quality development strategy. Going forward, we will stick to our strategic focus, deepen and strengthen our strategy, further refined platform capabilities and deliver our unique value to consumers and society. Thank you.

Jiazhen Zhao: This is Jiazhen Zhao. Let me take your question on shopping festival. As always, during last year’s Singles Day and Double 12, we provided consumers with straightforward price discount to strengthen our more savings mindshare. For example, during the Double 11 last year, for the first time, we introduced direct price reduction on top of our RMB10 billion program for the — so we also expanded the brands and products covered by our promotions. This is to meet the growing demand for upgrades. We received positive feedback from our continued efforts. And during Singles Day, over 620 million consumers benefited from RMB10 billion program with order volume more than doubled. At the same time, we are happy to see that the value of our platform has been increasingly recognized by our merchants.

The number of merchants, brands and products participating in our promotional activities reached the new height. Our merchants are growing together with our platform. And while we are very pleased to see the results from our shopping festivals, our team actually chooses to pay more attention to the ongoing improvement in our platform’s capabilities and how we can better meet consumers’ demand for quality products at attractive prices all year round. Since the funding of Pinduoduo 8 years ago, we have always kept our focus on our core e-commerce business. By patiently given back to the consumers reserve, we gradually earn a positive user mindshare. I think the results we have today is not only brought by the promotions in the past quarter but also the return on investments we made in the past.

From the consumer side, we continue to see the growing trust from our users. And in addition to serving more new users, we are also expanding the volume share of our existing users. We believe it’s the result of our growing capabilities in offering more savings and better services. This very encouraging trend strengthens our confidence in the overall direction of the high-quality development strategy. And from the supply side, we leverage our technology and scale to provide differentiated services for our SME merchants. And through these services, we help SME merchants expand their market reach and at the same time, broadening the product selection available on our platform. And by doing so, we create a virtuous cycle. And looking ahead, we will continue to invest firmly and patiently to create long-term value for our consumers and merchants and also to build a solid foundation for the next phase of our journey.

Thank you.

Unidentified Company Representative: Operator, we are ready for the next question.

Operator: Your next question comes from Kenneth Fong with UBS.

Kenneth Fong: My first question is regarding Pinduoduo domestic business. Can management share your view on the overall consumption market in the upcoming year? What are the new trends that you’re seeing in the first quarter? My second question is on the shareholder return and margin. In fourth quarter, the company achieved a decent profitability in the best drop of intensified competition and rapid growth of your global business. Can management share your view of how we should think about the margin in 2024 and going forward? And meanwhile, on shareholder return, we saw that you have a very strong balance sheet and then cash flow given peers have announced large increase in share buyback and dividends. Do we have similar plans?

Jiazhen Zhao: This is Jiazhen. Let me take your question on the consumption market. In the past year, we actually clearly felt that depth with and also the resilience of the China consumer market and we are very confident in its future. And also from the activities we see on our platform, we clearly feel the improving consumer sentiment and we look forward to seeing that trend continue into this year with the support of more macro policies. We see many long-term driving forces behind the positive consumption trends. And first of all, consumers have desired for a better life which lays a solid foundation for consumption growth. And secondly, we see new retail formats and business models emerge with the technology innovation which also drives online penetration of retail sales.

This supports the industry’s [indiscernible] prospects as well. And thirdly, we see tremendous potential in a large number of quality national brands and agricultural products. And this also offers further opportunities for our platform. And in this favorable consumption environment, we will continue our investment to enhance our service capabilities, collaborate with more merchants to serve our consumers well and also improve the platform ecosystem. And by doing so, we hope we can create greater value for our society. Thank you.

Jun Liu: Ken, this is Jun. Let me take your question about the profitability and shareholder return. Well, regarding profitability, we always emphasize though we are still in the development stage — not our priority. Considering our current stage of development, our strategic focus remains on the high-quality development of the platform. So we will focus on building the platform’s long-term value which is consistent with the interest of our investors. Over the past years, guided by our strategy of high-quality development. We have made for investments in key areas. For example, we have continued to give back to consumers to deepen our mindshare. We also remain committed to R&D which R&D [indiscernible] in RMB10 billion for the second consecutive year.

This investment have yielded favorable initial returns. Moving forward, we will continue to make a decisive ambition investments where we see long-term ROI potential. And our business execution cycle is affected by various factors and may not align with our financial reporting cycle. Profitability on a quarterly basis, we are in eligibly fluctuate based on the different investment opportunities we identify. So the financial results in Q4 may not serve as a benchmark for future quarters. And regarding the share repurchase and dividends, you’re basically asking about our overall capital allocation which is also affected by the stage of forward department. Each company is at a different stage of department. And for us, we are still in the investment phase.

So we — our current focus is still to invest in our long-term value.

Operator: Your next question comes from Thomas Chong with Jefferies.

Thomas Chong: My first question is that we saw your global business has gain good momentum in the past year. Could you please share any of your view on the future plan for global business. Moreover, the market also pays attention to the company’s position on compliance. How would the company balance legal and compliance with your business development? My second question is about domestic competition. In the past year, many of your major competitors have pivoted in their strategies, putting more emphasis on price competitiveness, how does the management will be positioning of your competitors? Are you concerned that it might impact the market share of Pinduoduo? How do you adjust your own strategy in such [indiscernible].

Lei Chen: Thomas, this is Chen Lei. Let me take your question on global business. Our vision for global business is to utilize our supply chain and technological capabilites to bring outstanding merchants and high-quality products all over the world to global consumers, helping consumers from all backgrounds to achieve their dreams. Currently, the business view at a relatively early stage, taking many uncertainties and challenges ahead. To address these uncertainties, we must constantly improve ourselves with a genuine desire to learn from consumers in the market, we’re actively seek more innovations in technology and operation models to increase market competition and overcome challenges. As I mentioned earlier, despite shifts in the market environment and competitive landscape, consumers demand for more savings and better services is universal.

Therefore, we will be dedicated to integrating our high-quality development strategy in global operations and be prepared for long-term investments. We have confidence in the unique value of our platform and welcome like many partners to join us in creating more value for consumers globally. You also mentioned compliance, legal and compliance has always been fundamental to our business. It’s a big part of our strategic planning and the management team has put in extensive efforts in this area. Last year, we established a legal and compliance committee chaired by myself to reinforce our legal and compliance capabilities across regions. Through our continued efforts, we enhanced our internal compliance mechanisms and processes. With the humble attitude, we strive to stay abreast of the latest industry laws and regulations and maintain communication and cooperation with regulatory bodies in the countries where we operate.

We aim to align with high industry standards in the field of legal and compliance. We will continue to conduct research and investment in this area to lay a solid foundation for our long-term healthy development.

Jiazhen Zhao: This is Zhao Jiazhen. Let me take your question on [indiscernible]. As we mentioned earlier on this call, in 2023, we saw sustained recovery in consumer sentiment and at the same time, consumers start to care more and more about achieving attractive prices. And in this background, we think it is normal to see e-commerce platforms increased promotional efforts and also focus more on price competitiveness. And competition is inevitable in our industry. In the face of competition, we always focus on understanding and meeting the needs of consumers and keep working on our own capabilities. Over the past year, we have built good momentum on our high-quality development strategy and we are confident in the overall strategic interaction.

And moving ahead, we’ll be focusing on implementing our strategy every aspect of our platform operation. First, we’ll continue to deepen our consumer mindshare and we do so by offering more savings to our users. We will very closely follow consumer needs and launch very simple and direct promotional activities targeting the most desirable product categories and price ranges. This is the foundation that we need to keep investing in. And of course, a good consumer experience is not only about price. In terms of services, we also continue to refine our entire shopping experience from presale consultation, fulfillment, after sales services to consumer protection. Our goal is to offer a safe and enjoyable shopping experience for our users. And at the same time, as a tech company, will increase our investment in R&D and we are guided by the principle of tech for goods and we’ll continue to strengthen our capabilities to empower a wide range of SMEs, promote the digitization of the various industries and also introduce more popular products to the market.

And high-quality supply is a key component of the platform ecosystem and its essential to serving our users well. And from this angle, we hope that R&D will further drive the positive development of our ecosystem. And we believe that by focusing on these areas that critical to long-term value creation. We can remain calm in a fiercely competitive environment and continue to improve ourselves and create greater value for the consumers and the society. Thank you.

Unidentified Company Representative: Okay. Operator, it’s about time and I want to thank you all for — again for joining us today. And if you have any further questions, please reach out to our team and thank you. I’ll see you next quarter.

Operator: Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect.